Nureca Limited IPO consists of fresh shares aggregating to Rs. 100 crore. Nureca Limited IPO opens from Mon 15th Feb 2021 to Wed 17th Feb, in the price band of Rs. 396-400 per share. Nureca Limited IPO has only 10% portion reserved for retail. Nureca is a B2C company engaged in the business of home healthcare and wellness products.
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Nureca Limited IPO Details
| Issue Period | Mon, 15th Feb – Wed, 17th Feb 2021 |
| Issue Details | Fresh Issue of Equity Shares aggregating upto ₹ 100 Cr |
| Issue Size (₹ Cr) | ₹ 100 Cr |
| Price Band | ₹ 396 – 400 |
| Bid Lot | 35 Shares |
| Issue Structure : | |
| QIB | 75% of the net offer |
| NIB | 15% of the net offer |
| Retail | 10% of net offer (247,500 Shares – ₹ 9.90 Cr) |
| BRLMs | ITI Capital Ltd |
| Registrar | Link Intime India Pvt. Ltd. |
Updates:
- ANCHOR ISSUE: IPO bound, Nureca Ltd raised Rs 44.55 crore from two anchor investors. Nexpact Ltd invested Rs 34.55 crore against 8.63 lakh equity shares (77.55 %). Next Orbit Ventures Fund invested Rs 10 crore for 2.50 lakh equity shares which comprise 22.45% of the anchor investor book.
About Nureca Limited
- Nureca Ltd is a B2C company engaged in the business of home healthcare and wellness products.
- It offers quality, durability, functionality, usability and innovative designs.
- Nureca Ltd enable their customers with tools to help them monitor chronic ailments and other diseases, to improve their lifestyle.
- Currently, the company operates under brand such as Dr. Trust, Dr. Physio and Trumom. Its product portfolio largely supports home health market in India, making it a one-stop solution provider.
- Nureca Ltd products are classified under 5 categories
- Chronic Device Products
- Orthopedic Products
- Mother and Child Products
- Nutrition Supplements
- Lifestyle Products.
- Nureca has recently set up a manufacturing unit in Chandigarh where they can do final assembly of their products pursuant to the purchase of equipment’s brought in semi knock down condition from various sources, branding, labelling and packaging suitable for marketing and transport in India. They also repair the defective or damaged equipment which has been sold before in the market in their manufacturing facility.
Nureca Limited IPO: Financials
| Particulars/ Rs. In cr. | H1FY21 | FY20 | FY19 | FY18 |
| Revenue from Operations | 122.15 | 99.43 | 61.9 | 20.05 |
| Revenue Growth (%) | – | 60.63% | 208.73% | – |
| EBITDA | 50.01 | 9.76 | 9.14 | 4.39 |
| Profit Before Tax | 48.65 | 8.61 | 8.84 | 4.32 |
| Net Profit | 36.18 | 6.4 | 6.23 | 3.11 |
| Net Profit Margin | 29.62% | 6.44% | 10.06% | 15.51% |
| Equity Share Capital~ | 7 | 0.01 | 0.01 | 0.01 |
| Reserves as stated~ | 44.65 | 14.92 | 7.94 | 1.71 |
| Net worth as stated | 51.65 | 14.93 | 7.95 | 1.72 |
| EPS –Basic (₹ ) | ||||
| RoNW (%) | 70.06 | 42.82 | 78.36 | 180.93 |
| NAV-Basic(₹ ) | 73.78 | 14,934 | 7,945 | 1,720 |
| Face Value | 10 | |||
| EPS –Basic (₹ ) as stated | 51.69 | 9.14 | 8.89 | 4.45 |
| Equity Post IPO | 10 | |||
| IPO Price | 400 | |||
| EPS (Post IPO) FY20 | 6.40 | |||
| PE | 62.50 | |||
| EPS ann H1Fy21 | 72.36 | |||
| PE ann H1FY21 | 5.53 | |||
| Market Cap | 400 | |||
| Market Cap / Sales | 4.0 |
Pros
- Strong portfolio of products.
- Good focus on quality and innovation
- Asset light business model
- Good understanding of consumer preferences.
- Experienced promoters.
- Demonstrated its ability to adopt a good E-commerce strategy to establish its brand and sell products.
Cons
- Dependent on third party manufacturing.
- Competition from other players in healthcare product device industry.
- May have problems to to adhere to regulations by FDA / Govt.
- Search and seizure operations were conducted at residences of promoters in Dec 2020. The outcome is not yet known.
- Related party transactions.
Nureca Limited IPO: Assessment
- Nureca is a 4 year old company, generating 95% of its sales from e-commerce mainly under Dr Trust brand.
- Nureca Ltd. is a digital first company wherein they sell products through online channel partners such as e-commerce players, distributors and retailer. Additionally they sell their products through its website ‘drtrust.in’. 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 as these products had good demand.
- Nureca Ltd Revenue from Operations has grown at a CAGR of 122.68% during Fiscal 2018 to 2020 and Net Profit has grown at a CAGR of 43.35% during Fiscal 2018 to 2020.
- This is a very small issue and quota for retail is just 10%
- The company has reaped considerable benefits from the COVID 19 pandemic and such performance in the near term may be difficult to repeat.
- As the issue is below Rs. 250 cr., Nureca Ltd initial listing will be in the “T” group.
- Nureca Ltd made a preferential allotment in Oct 2020 at Rs. 100 per share. Thus present rate being demanded is quite high.
- The IPO may be commanding GMP of about Rs. 100-120 as per some reports.
- There are substantial related party transactions.
- Investor Yash Shares and Stock Private Limited holds a 5.88 percent stake in the company.
- Nureca Limited IPO is being offered at PE of 62.5 times based on Fy20 earnings.
- Despite issues like Income tax raids, related party transactions and uncertainty about the performance in post Covid times, the issue may get heavily oversubscribed due to very small size & sector in which it operates.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.