Medplus Health tumbles 8% as 13% equity changes hands via block deals

Shares of Medplus Health Services came under heavy selling pressure on Thursday after nearly 18 million shares changed hands on the counter. At 10:00 AM, the stock was quoting 7 per cent lower at Rs 831, having crashed 8.2 per cent to Rs 819 intraday, as against 0.24 per cent gain in the benchmark S&P BSE Sensex.

At 9:15 AM, a combined around 15 million shares changed hands on the counter at Rs 852.7 apiece on the BSE and the National Stock Exchange (NSE). This was 12.8 per cent of the outstanding equity, valuing the deal at Rs 1,319 crore. 

The names of the buyers and sellers could not be ascertained immediately.

However, as per reports, PI Opportunities Fund and Lavender Rose Investment Ltd were, together, looking to pare their up to 8 per cent stake in the company. At the end of the June quarter, PI Opportunities Fund held a 14.11 per cent stake in the company, while Lavender Rose had a 17.24 per cent stake.

MedPlus Health Services, the country's second largest pharmacy retailer, had listed on the stock exchanges on December 23, 2021. The IPO was subscribed about 53 times with the portion set aside for qualified institutional buyers seeing subscription level of 112 times, while non-institutional investors (NIIs) and retail investors saw their portions getting subscription levels of 85 times and 5.23 times, respectively. Employees portion got booked by 3.05 times.

PI Opportuninities Fund and Lavender Rose Investment, that held 22.07 per cent and 24.58 per cent stake before the IPO, were some of the early investors in Medplus Health. They had pared their partial stake via offer for sale during the company's initial public offer. 

Madhukar Reddy Gangadi, Lone Furrow Investments Private Ltd, and Agilemed Investments are the promoter/promoter groups with 12.87 per cent, 14.44 per cent, and 13.12 per cent stakes, respectively.

In the April-June quarter, the pharmacy retail chain posted a post-tax profit of Rs 3.76 crore compared to Rs 3.67 crore a year ago. The consolidated profit after tax dropped 86 per cent sequentially from Rs 26.55 crore reported in Q4FY23. 

Revenue from operations, however, climbed 29 per cent to Rs 1,284.29 crore in Q1-FY24, from Rs 993.65 crore in the year-ago period. The company's Ebitda surged 28.6 per cent on-year to Rs 80.73 crore from Rs 62.77 crore but dropped 15.3 per cent from Rs 95.33 crore in Q4-FY23.

Medplus' Q1-FY24 revenue on a low base. It saw lower private label pharma sales due to weak seasons (7.8 per cent, from 8.4 per cent in Q4-FY23), which eroded gross margin to 21.3 per cent. As a result, the retail pharmacy's operating Ebitda margin slipped to 2.7 per cent (-100bp QoQ).

"Medplus' revenue growth will be backed by margin expansion as it adds stores aggressively and works to improve same store sales growth (SSSG) of existing ones by introducing its own brands. While this may pose near-term margin risk, higher volumes should compensate in the long run and offer a sticky customer base. We cut FY24E/25E Ebitda by 8 per cent each to factor this in. We remain confident of Medplus' long-term journey as stores mature," said analysts at Nuvama Institutional Equities in their result review report.

The brokerage retained its 'BUY' rating with a target price of Rs 1,045.