Wellness Forever Medicare Ltd IPO

Last Updated: 09 February 2022 11:12 AM by 5Paisa

IPO synopsis:
The Adar Poonawalla backed pharmacy giant- Wellness Forever Medicare, filed a Draft Red Herring Prospectus with SEBI on October 1, 2021. The company plans to raise between Rs.1,500-Rs.1,600 crore. This IPO comprises of a fresh issue worth Rs.400 crore and an offer for sale of up to 16,044,709 equity shares. As a part of the OFS, Ashraf Biran and Gulshan Bakhtiani are offloading around 7,20,000 equity shares each, Mohan Chavan is offloading approximately 1,20,000 equity shares and an approximate 144.85 lakh shares are being offloaded by the other shareholders.
 This Mumbai based pharmacy chain is the second pharmacy chain to file for an IPO after MedPlus, based in Hyderabad, filed its DRHP in August. The book running lead managers to this issue are IIFL Securities Ltd, Ambit Private Ltd, DAM Capital Advisors Ltd and HDFC Bank Limited.

Objectives of the issue:
The company plans on utilizing the proceeds from the issue for-
•    Rs. 70.20 crore as funding to set up new outlets
•    Rs.100 crore to be set aside for repayment or prepayment of debt 
•    Rs.121.90 crore to fund working capital expenses

Wellness Forever Medicare was founded in 2008 by three veterans in the pharmaceutical industry- Ashraf Biran, Gulshan Bakhtiani and Mohan Chavan. The company has 236 stores across 23 cities in Maharashtra, Karnataka and Goa. They have a registered customer base of 6.7 million customers as of June 31, 2021. They aim to increase their market penetration in the Tier 2 and Tier 3 cities and also actively participate in the e-commerce segment which has an estimated growth CAGR of 45%. 
The Indian pharmacy retail sector has been growing at a very healthy rate because of the increase in healthcare expenditure and consumer base. India’s pharmaceutical industry is the third largest in the world by volume and 14th largest by value. The market value of the Indian pharmaceutical market is Rs.150,000 crore in FY20. 
Pharmacy chains have 8.5% of the total pharmacy retail market in India in FY 2021.The company opened 31, 35 and 50 stores in FY19, FY20 and FY21 respectively. Out of these, 115 stores are operational as of June 30,2021. An approximate Rs.456.54 million is estimated as the cost of all the stores opened by the company in the last three fiscal years. Wellness Forever Medicare has a goal of opening 180 stores by FY24.  
 

Financials: