The initial public offering (IPO) of MedPlus Health Services Limited is opening on Monday and it will remain available for bidding till 15th December 2021.
The price band of the book built issue has been fixed at Rs 780 to Rs 796 per equity share and India's second-largest pharmacy retailer company aims to raise Rs 1,398.30 crore from this public offer ( Rs 600 crore from fresh issue and Rs 798.30 crore through Offer for Sale or OFS).
Proceeds of the fresh issue will be used for funding the working capital requirements of the company's subsidiary, Optival.
Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and 35 per cent for retail investors.
Investors can bid for a minimum of 18 equity shares and in multiples thereof.
According to market observers, shares of Medplus Health Services are available at a premium of Rs 280 in the grey market today.
Check out what brokerage houses/analysts say about the IPO, as per Moneycontrol report.
Aditya Birla Capital
At the issue price, Medplus will trade at 3.1x FY21 P/S and 40x FY21 EV/EBITDA. Additionally, given the blue ocean opportunity in Medplus’ business verticals and the gradual shift from unorganised to organised sector, in the near term, Medplus would be valued more on its longer-term growth potential and less on current financials.
The brokerage house identifies the key risks of increase in competitive intensity from online players and delay in EBITDA break-even at new stores. Medplus is a compelling play in growing the omni-channel model.
It assigns a ‘subscribe’ rating to the issue as it believes that Medplus will gain scale and profitability.
Given its fully integrated offerings, the company is profitable, despite higher discounts across omni-channel deliveries. At the upper end of band, Medplus will trade at 2.4x EV/sales and 44x EV/EBITDA (adjusted for pre-IND AS) on annualising H1FY22 numbers.
Given that the company has a very strong asset turnover with an eye on improving its profitability further and that the IPO valuation appears cheaper, compared to its peers set, the brokerage house recommend subscribing to the IPO.