Nureca IPO opens: Should you invest in this B2C company?

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Initial public offering (IPO) of a B2C company Nureca kicked off on February 15.

The company aims to raise around Rs 100 crore from the offer which will close on February 17.

Nureca has fixed a price bank of Rs 396-400 for the IPO. According to the draft papers, proceeds of the issue will be used for funding incremental working capital requirements of the company and general corporate purposes.

Further, through the listing, the company expects to enhance its visibility and brand image among existing and potential customers and the creation of a public market for equity shares in India.

ITI Capital is the sole book-running lead manager to the issue. Shares of the company are proposed to be listed on BSE and NSE both.

Here’s what leading brokerages suggest regarding the offer:

Reliance Securities: Subscribe

Nureca operates in a highly fragmented market. Given the huge opportunity in-home healthcare (HH) segment, growth momentum is expected to sustain in subsequent years. Notably, HH Market in India and neighbouring countries, which was pegged at Rs 20,800 crore in 2019, is expected to grow to Rs 38,900 crore by 2025 (at a CAGR of around 11%).

Further, IPO is valued at 5.6x annualised earnings report in 1HFY21, which looks to be attractively valued given high asset turnover and return ratio of the company. As there is no listed peer available, benchmark valuation is difficult to ascertain. However, thin history, frequent policy changes by the government and substantial improvement in earnings before fundraising could raise some apprehensions. However, considering attractive valuations and sizeable opportunity, the brokerage recommends ‘Subscribe’ to this issue.

Angel Broking: Positive outlook

Nureca enables their customers with tools to help them monitor chronic ailments and other diseases, to improve their lifestyle. Nureca is a digital-first company wherein they sell their products through online channel partners such as e-commerce players, distributors and retailers. Further, they also sell their products through their own website drtrust.in. The company classifies their products portfolio under the 5 categories such as Chronic Device Products, Orthopedic Products, Mother and Child Products, Nutrition Supplements and Lifestyle Products. The brokerage has a positive outlook on the IPO.

Marwadi Shares and Finance Ltd: Subscribe

Considering FY20 adjusted EPS of 6.40 on a post-issue basis, the company is going to list at a P/E of 62.5X. There are no listed entities in India that are engaged in a similar line of business and whose business is comparable with that of this business. Dr Trust is a known brand of the company for its innovative products in the market, and, with the segment showing significant potential for growth, the company is positioned to show significant growth.