Should you book profit in Medplus after a solid debut?

New Delhi: After a series of dull listings, Medplus Health Services had a better than expected debut on the bourses as the scrip listed at Rs 1,040 on NSE, a premium of 31 per cent, over its issue price of Rs 796. On BSE, the counter listed at Rs 1,015.

Following the listing pop, the scrip saw follow up buying as it gained 10 per cent to scale an intra-day high of Rs 1,119.95, taking the entire gain to 41 per cent over the issue price. Interestingly, it did not slip below the listing price.

Investors, who received the allotment, are wondering if they should book the profits or hold it for a long term, whereas others, who were not lucky enough to get the allotment, are eyeing the entry levels in the counter.


The majority of analysts are bullish on the counter and recommend it to hold for the long run. They are bullish on the growth prospects, despite pricey valuations.

Investors should continue to hold the stock for the long-term as the company is likely to command premium valuations in the future as well, said Vikas Jain, Senior Research Analyst, Reliance Securities.

"One should buy the counter in Rs 950-980 range, whereas short term investors should exit at Rs 1,200-1,250 levels," he added.
"The south India dominant company has a strong room for growth in other parts of the country."

The Rs 1,398.30 crore IPO of Medplus Health Services was open for subscription between December 13-15. The company sold its shares in the range of Rs 780-796 per share.

"The listing has been decent and long-term investors can continue to hold the stock," said Ajit Mishra, VP-Research, Religare Broking. "For fresh buying, one may wait as we may see a dip due to the prevailing corrective phase in the market."

In FY21, the penetration of the organized pharmacy retail market at a pan-India level was estimated at around 11 per cent, which is low compared to developed economies and China.

There is immense growth potential in the organized pharmacy market. MedPlus is the second-largest pharmacy retailer and is expected to benefit from the expansion in the market, said Rajnath Yadav, Research Analyst, Choice Broking.

"With strong listings, we recommend short term investors to take an exit, while long term investors can remain invested," he suggested.

It received a strong response as it was subscribed about 53 times. The quota for institutional bidders got bids for 112 times, whereas the HNI portion was subscribed a little more than 85 times. Retail allocation fetched more than 5 times bids.

Santosh Meena, Head of Research, Swastika Investmart said that long-term investors should hold the stock and it might turn into a wealth creator in the next 2-3 years, whereas short-term investors should have a stop loss of Rs 875.

"We believe the growth opportunities from the industry will justify the company's valuation in the long run, even if it appears to be expensive at first glance," he added.

Incorporated in 2006, Medplus Health Services is India's second-largest pharmacy retailer in terms of the number of stores and revenue, offering pharmaceutical and wellness products.

The company has over a 20 per cent share in organized pharmacy retail with a network of 2,165 stores, majorly in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal, and Maharashtra.

Akhilesh Jat, Pharma Analyst at CapitalVia Global Research said that despite being the second-largest pharmacy retailer, their presence in India is more limited to southern parts of India and that has been its biggest drawback.

"We can expect a small correction of 10-15 per cent in the stock prices keeping in mind the volatility, he added. "In the long run, we expect that the company will grow constantly with the expansion of stores around the country."