Nureca IPO

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1. Nureca is basically a B2C (Business to Customer) type of company wherein they sell home healthcare and wellness product.

2. Founded in 2016, the company is promoted by Sanjay Goyal, and Aryan Goyal, who were also promoters in troubling company Nectar Life Sciences along with their father Mr. Sanjiv Goyal. However, just before the IPO i.e. in Oct-2020, both the sons have resigned from Nectar Life Sciences, gifted shares to their father and signed a family partition deed.

Read about Nectar Life Sciences here

3. Products of the Naureca

(i) Chronic Device Products – which includes products such as blood pressure monitors, pulse oximeters, thermometers, nebulizers, self monitoring glucose devices, humidifier and steamers.

(ii) Orthopedic Products – which includes rehabilitation products such as wheelchairs, walkers, lumbar and tailbone supports and physiotherapy electric massagers.

(iii) Mother and Child Products – which includes products such as breast pumps, bottle sterilizers, bottle warmers, car seats and baby carry cots.

(iv) Nutrition Supplements – which includes products such as fish oil, multivitamins, probiotics, botin, apple cider and vinegar.

(v) Lifestyle Products – which includes products such as smart scales, aroma diffusers and fitness tracker.

Naureca sells its products under the brand name of Dr. Trust., Dr. Physio and Trumom. You can check the reviews of the products on Amazon to know more about them.

4. How they sell?

Naureca sells products via third party e-commerce websites such as Flipkart, Amazon etc. retailers and distributors and through its own website dtrust.in

5. Manufacturing?

Naureca do not have any manufacturing of their own. They procure products from third-party manufacturers as per their own design and specification requirements.

6. Financial Performance

The revenue from operations on a consolidated basis was ;

3MFY21 = 30 Crores (during corona time, the demand for Oximeter, and other medical equipment’s rises manifolds as people can’t venture out for regular checkups and Oxygen needs to be monitored on daily basis for corona patient)

FY20 = ₹99 Crores
FY19 = ₹61 Crores
FY18 = ₹20 Crores

The revenue from operations has grown at a CAGR of 122.68% during Fiscal 2018 to 2020.

7. Regulations

The medical line of business in which company is selling products is highly regulated. Most of the products before selling in the market have to be passed by Indian Food and Drugs Administration. Moreover, the manufacturing facilities and processes used by the suppliers for manufacturing Nureca products should be approved by the FDA and their respective regulators.

8. Industry Analysis

a) Healthcare expenditure per Capita in India was Rs. 5460 in 2019, which places total health expenditure at 3.5% of GDP, much lower than the global average of 11%. m. In 2018, International Monetary fund had identified poor state of public health as the 12th most important hurdle for ease of doing business, ahead of
tax, crime, regulations and policy instability in the country.

b) The Home Health Market in India and neighbouring countries is estimated at ₹ 20,757.0 Cr in 2019 and is expected to grow to ₹ 38,920.7 Cr by 2025 at a CAGR 11.0%. Nutritional Supplements Segment forms ~86% of the total Home Health Market, followed by Chronic Disease Products segment at 6.5%.

 

Objects of the Nureca IPO:

It is pure Offer for sale IPO wherein the company is raising 100 Crores for the following purpose. a) To meet the working capital requirements of the business.

Nureca IPO Details:

Open Date: Feb 15 2021
Close Date: Feb 17 2021
Total Shares: 2500000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 100 Cr.
Lot Size: 35 Shares
Issue Price: ₹ 390-400 Per Equity Share
Listing At: NSE,BSE
Listing Date: Feb 24 2021

Promoters And Management:

(i) Saurabh Goyal, aged 35 years, is a Chairman and Managing Director of the Company. He holds a bachelor’s degree in business administration from Amity University and a master’s degree in science in International Management from King’s College, London. He has worked with Nectar Life Sciences Limited and has over 10 years of work experience in marketing division. He has been a Director of our Company since February 11, 2017. (ii) Smita Goyal, aged 36 years, is a Non-Executive Director of the Company. She holds a bachelor’s degree in arts from University of Rajasthan and master’s degree in business administration in customer relationship management & marketing from Amity University, Uttar Pradesh. She is working with Nectar Biopharma Private Limited as Vice President. She has been a Director of the Company since October 21, 2020. (iii) Rajinder Sharma, aged 56 years, is a Non-Executive Director of the Company. He is an undergraduate. He has been a Director of the Company since November 30, 2018.

Financials of Nureca IPO:

(Fig. in Crs)
Year Revenue EBITDA OPM PAT NPM Shares F.V. EPS NW RONW
2018 20 5 25.00% 3 15.00% 1.00 10 3 2 150%
2019 61 9 14.75% 6 9.84% 1.00 10 6 8 75%
2020 99 9 9.09% 6 6.06% 1.00 10 6 15 40%
6MFY21 120 50 41% 36 30.00% 1.00 10 36 51 70%
IZ View: 1. The company's business is asset-light model because they procure products from third party manufacturer and sell via online platforms. 2. The company's revenue has grown at tremendous speed in the last 3 years. The first 6MFY21 results are even more eye-catching. Actually, the products company sell were in high demand during Covid-19 time, that is why we are seeing high growth. 3. EPS (3 year average) = 5 4. P/E = 80x (very high) 5. The company is almost debt free.

Comparison With Peers:

There are no listed entities in India that are engaged in similar line of business or whose business is comparable with that of our business.

Recommendation on Nureca IPO:

Review and Recommendation of InvestorZone are 3/10 1. Only three years old company. Due to very less data available for analysis, it is difficult to analyze it. 2. The company do not have any manufacturing of its own. They basically procure all the products from third-party manufacturers and sell via online website. There is no moat in the business. 3. Company is asking a Mcap of ~400 Crores on revenue of 100 Crores in FY20. So, Mcap to sales is 4x(high). 4. In Oct-2020, the current promoters have filed a family partition deed wherein they have left the Nectar Life Sciences (Listed company) and gifted all shares to their father. Don't know why this partition has happened just before the IPO. May be promoters are trying to dissuade themselves from the Nectar Lifesciences, the entity which is struggling to pay their debts. 5. Just before the IPO, the company has issued 5 Lakh shares for Rs. 100 per share and now company is coming up with an IPO at Rs.400 per share.

Lead Manager of Nureca IPO:

  1. ITI Capital Limited

Registrar of Nureca IPO:

  1. Link Intime India Private Limited

Discussion on Nureca IPO:

    Subscription as on 17.02.2021 at 5:00 pm

    1. Qualified Institutional = 3.10 x
    2. Non Institutional = 31.59 x
    3. Retail Individual = 166.58x

    Subscription as on 17.02.2021 at 4:40 pm

    1. Qualified Institutional = 3.10 x
    2. Non Institutional = 31.59 x
    3. Retail Individual = 166.02x

    Subscription as on 17.02.2021 at 4:20 pm

    1. Qualified Institutional = 3.10 x
    2. Non Institutional = 31.59 x
    3. Retail Individual = 164.37x

    Subscription as on 17.02.2021 at 2:50 pm

    1. Qualified Institutional = 2.70 x
    2. Non Institutional = 9.37 x
    3. Retail Individual = 137.51 x

    Just before the IPO, the company has issued 5 Lakh shares for Rs. 100 per share to the following shareholders.

    1. Yash Shares and Stock Private Limited = 441000
    2. Tushar Bhupatlal Sarda = 30000
    3. Neha Bhall = 10000
    4. Vinayak Sharma = 3000

    etc.

    As on filing DRHP, Nureca IPO has outstanding shares of 75 Lakh.

    In the IPO, company is issuing 25 Lakh shares for raising 100 Crores.

    Total Shares after IPO = 1 Cr.

    Mcap = 400*1 Cr = 400 Crores.

    Revenue (FY20) = 100 Crores.

    Mcap/Revenue= 4x (high)