Nureca IPO Analysis
Last updated: 12 Feb, 2021 | 07:45 am
Nureca is set to raise up to Rs 100 crore via IPO which opens on 15th February, Monday. Here are the details:
About Nureca Ltd
- Nureca is a B2C company engaged in the business of home healthcare and wellness products. The company enables its customers with tools to help them monitor chronic ailments and other diseases to improve their lifestyle.
- The company's flagship brands include Dr Trust, Dr Physio and Trumom. The products catered under the Dr Trust brand helps customers to effectively monitor chronic ailments. Dr Physio is used for company's products under Orthopedic category such as electric massagers, wheelchairs and walkers. Trumom is used for company's products under Mother and Child Care category.
- During Covid-19 pandemic, company's products such as oximeter, gluco meter, nebulizer and BP monitor were categorized under the essential goods and their operations were not shut down during this pandemic. As a result, the company has posted very good numbers in Apr-Sep 20 period.
- Nureca competes with local and global companies operating in India. The home healthcare and wellness market is extremely fragmented with over 50 players, most of them Indian, with mostly generic products, showcasing no significant competitive advantage in terms of innovation or differentiation.
- Important players include Omron, Philips, Johnson and Johnson, Roche and Bayer. According to the companies DHRP, there are no listed peers.
- The company has seen a strong growth in topline over the last 3 years, with revenue from operations increasing from Rs 20 cr in FY18 to ~Rs 100 cr in FY20.
- PAT margins have also improved significantly to ~31% in Q1FY21 led by improvement in channel mix and cost efficiencies. Owing to the asset light nature of the business, the RoNW (Return on Net Worth) for FY20 is at a strong ~42%.
- The company has posted a very strong performance in the Apr-Sep 20 period, as the ongoing pandemic led to very strong demand for its products. According to management, such performance is likely in the near term with changing lifestyle and rising awareness for hygiene and health related products.
- The firm posted a net profit of Rs 36 crore in the first half of FY21.
About the issue
- Issue open: 15th Feb - 17th Feb 2021
- Price band: Rs 396 - Rs 400 per share
- Issue Size: Rs 100 crore (Gross)
- Issue Size: The issue size includes a reservation of shares worth Rs 1 crore for its employees. The eligible employees will get shares at a discount of Rs 20 per share.
- Reservation for QIB - 75% , Retail - 10%, Non institutional Investors -15%.
- Bid lot: 35 shares, and in multiples of 35 shares
- Post issue market cap Rs 397- 400 cr
At the higher end of the price band, Nureca IPO is priced at a PE ratio of ~58 times FY20 earnings per share (on a post issue diluted basis). However, if we take into account the company's stellar performance in Apr- Sep 20 period, the issue is attractively priced at a PE ratio of around ~5.5 times EPS. Given strong topline growth in the last few years, robust return ratios, favourable outlook and reasonable valuations, we remain positive on the prospects of the issue.