Continuing its recent downtrend, shares of India's second-largest retail pharmacy chain, MedPlus Health Services, reached a fresh all-time low of ₹583 in Wednesday's intra-day trade. The stock has been trading lower for the last three trading sessions and at current levels, the stock is 26.75% below its issue price of ₹796.
On Thursday's trade the stock opened positively. At 10:15 a.m., the stock was trading at ₹605.95, up by 1.3% on the BSE.
Despite MedPlus' aggressive pricing, investors showed strong interest in the ₹1,300 crore IPO and several domestic brokerage firms responded positively due to the company's higher expansion plans and higher growth prospects. The IPO was subscribed to 52.6 times. The company received total bids of 66,13,67,268 shares against the total issue size of 1,25,75,154 shares.
Following a strong response from investors, MedPlus made a solid start on the exchanges. The scrip was listed at a premium of 31% at ₹1,040 on the NSE as against the issue price of ₹796. The stock rose further, and within a month after its listing, it reached an all-time high of ₹1,343. However, the stock has failed to maintain this bullish trend, falling nearly 37% in two months and remaining in a bearish trend to date, falling 55.50%. On June 8, the stock traded below its issue price for the first time, and it has remained in that trend since.
Despite the stock's weak performance, Japanese brokerage firm Nomura is bullish on the stock. The brokerage has initiated coverage on the stock with a 'buy' call at a target price of ₹925/share. The brokerage firm expects revenue growth for Medplus to accelerate and margins to expand from the current low base, CNBC TV18 reported.
Nomura forecasts revenue of CAGR 26.9 percent over the financial year 2022-2025 and it expects the margin to expand to 3.25 percent by FY25.
Medplus reported a 93.1% drop in its net profit of ₹3.2 crore in Q1FY23 as against a net profit of ₹46.6 crore in the same quarter of last fiscal. Net sales stood at ₹1,003.8 crore in the June quarter, up 4.62% from ₹959.4 crore in June 2021. The EBITDA stands at Rs. 62.78 crore in June 2022, down 37.67% from Rs. 100.73 crore in June 2021. Medplus Health's earnings per share (EPS) dropped to ₹0.27 in Q1 from ₹4.34 in the corresponding quarter of last fiscal.
Foreign investors' stake in the company stood at 3.2% in the June 2022 quarter as against 3.0% in Q4 2021, up by 2%. The number of foreign investors increased from 58 to 68 in Q1FY23. Promoters' holdings remain unchanged at 40.4%. While mutual funds increase their holdings from 29.3% to 29.5% in the June quarter,
MedPlus is the second largest pharmacy retailer in India in terms of revenue and number of stores as of 31 March 2021. The company offers a wide range of products, including pharma and wellness products, including medicines, vitamins, medical devices, and test kits, and FMCG goods, such as home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitizers.
An average of 07 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
