MedPlus Health IPO opens: Should you subscribe? Here's what brokerages recommend

Medplus, which was founded in 2006, offers a wide range of products, including pharmaceuticals, health products, and fast-moving consumer goods (home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitisers).

Owing to the huge opportunity of growth for the company as the organised retail pharmacy accounts for only 10 percent of the total retail pharmacy, most brokerages have a positive view about this public issue and have assigned a ‘subscribe’ rating.

ICIC Securities assigned a ‘subscribe’ rating to the IPO. In its report, it highlighted the risks associated with the business and said, " Medplus’ operations are subject to high working capital requirements and any changes in product mix can impact the margins.”

The brokerage added that Medplus is well suited to leverage on an omnichannel platform with a hyperlocal delivery model and is available at a decent valuation.

“Medplus is a compelling play in growing the omnichannel model. Given its fully integrated offerings, the company is profitable, despite higher discounts across omnichannel deliveries,” said brokerage firm Prabhudas Liladhar.

It assigned a ‘subscribe’ rating to the issue. “At the upper end of the band, Medplus will trade at 2.4x EV/sales and 44x EV/EBITDA (adjusted for pre-IND AS) on annualising H1FY22 numbers. We ascribe 35x EV/EBIDTA /3x EV/ sales to Apollo’s offline pharmacy business on a one-year forward basis,” Liladhar said in its report.

KR Choksey too assigned a 'subscribe' rating to the IPO given the company's strong asset turnover with an eye on improving its profitability further. "The IPO valuation appears cheaper, compared to its peers set, we recommend 'subscribe' to the IPO,” said the brokerage firm in its report.