Medplus' Rs 1,398 crore IPO subscribed 52.6x on strong QIB interest

Through the IPO, Medplus raised Rs 600 crore in fresh capital. The remaining Rs 798 crore was an OFS

Pharmacy chain Medplus Health Services’ IPO saw 52.6 times more demand than the shares on offer. The IPO garnered bids worth over Rs 52,000 crore. The qualified institutional buyer (QIB) portion of the IPO garnered 111.9 times subscription, high-networth individual (HNI) portion was subscribed over 85 times and retail portion saw over 5 times subscription.

The price band for Warburg Pincus-backed company’s Rs 1,398-crore IPO was set at Rs 780-796 per share.

Through the IPO, Medplus raised Rs 600 crore in fresh capital. The remaining Rs 798 crore was an offer for sale (OFS). Among the selling shareholders were Premji Invest’s PI Opportunities Fund, which offloaded shares worth Rs 623 crore and Natco Pharma who sold shares worth Rs 10 crore.

Analysts said the reasonable valuations and company’s large presence helped attract a lot of institutional investors.

"We believe Medplus will trade at a higher multiple as it is a pure-play omni-channel company with scarcity premium and high growth rates. Medplus EBITDA has grown at 48 per cent CAGR over FY19-22. Annualizing H1FY22 numbers, at the upper end of the price band, the company will trade at 2.4x EV/sales and 44x EV/EBITDA versus 3x EV/sales and 35x EV/EBIDTA (based on our parameter) to Apollo’s offline pharmacy business on a one-year forward basis,” said Param Desi Research Analyst at Prabhudas Lilladher.

At the top-end of the price band, the company will have a market cap of nearly Rs 9,500 crore.

Medplus Health is the country’s second largest pharmacy retailer in terms of revenues for the financial year 2020-21 and also in terms of number of stores. The company operates over 2,000 stores across seven states, which include Tamil Nadu, Andhra Pradesh, Telangana and Karnataka.

The company medicines, wellness products, medical devices, and fast-moving consumer goods. In FY21, the company had reported revenues from operations of Rs 3,048 crore and net profit of Rs 62.7 crore.

The company has downsized its IPO to realign to the market conditions. In August 2021, when the company filed its offer document with Sebi, the IPO size was pegged at Rs 1,638.7 crore. While the fresh issue component remains the same, the OFS portion has been reduced by about Rs 240 crore.