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Medplus Health Services Ltd.: Subscribe

Medplus Health Services Ltd.: Subscribe
  • Date

    13 Dec 2021 - 15 Dec 2021

  • Price Range

    ₹ 780 - ₹ 796

  • Minimum Order Quantity

    18

  • (D) RHP

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Incorporated in 2006, MedPlus Health Services is India’s 2nd largest pharmacy retailer in terms of the number of stores and revenue. The company offers pharmaceutical and wellness products i.e. medicines, vitamins, medical devices, test kits, and fast-moving consumer goods like home and personal care products sanitizers, etc. It is also the 1st pharmacy retailer in India to offer an omnichannel platform wherein customers can purchase products through stores, place orders over the telephone, online orders and a “Click and Pick” facility. The company has maintained a strong focus on scaling up their store network, having grown from operating their initial 48 stores in Hyderabad at the inception of their business to operating a pharmacy retail network of over 2,000 stores distributed across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal

and Maharashtra, as of March 31, 2021. They have witnessed a massive growth of 17% in store expansion in FY20-21. Medplus started actively focusing on online sales in FY20 and their focus is on “speed” and “convenience” as a customer value proposition for customers who place an order online. They are now able to deliver their customers’ online purchases within 2 hours of purchase in select cities of Hyderabad, Bangalore, Kolkata, Pune and Nagpur. Almost 9% of their revenue from operations are from online platform. Company’s business operations across the entire value chain are backward integrated and are wholly-managed and operated by them. Their operations are supported by their technology-driven supply chain and distribution infrastructure, organized in a hub-and-spoke model
Objects of the issue:
The IPO proceeds shall be used towards the following purposes
  • Investment into the material subsidiary “Optival” for funding working capital requirement of up-to INR 4.67 Bn
  • General corporate purposes, balance INR 1.33 Bn
Investment Rationale:

Consistently delivering compelling customer value proposition

The MedPlus brand stands for genuine and good quality products. They are able to offer discounts up-to 20% to customers given integrated supply chain and cost efficient model. They cater to a wide range of customers, including discount seekers, customers with urgent needs and customers who value convenience. Their transparent pricing, with discounts based on average order value, allows them to address the needs of different segments appropriately. They have developed a better understanding of their customers requirements through years of operational experience (up-to15 years), active customer engagement and leveraging the real time data analytics platform. They expect that their well-established brand, quality pharmaceutical products offering, array of products, ability to achieve high fulfilment rates, offering of neighborhood convenience with large store footprint, along with competitive pricing to their customers, will continue to drive their gains in market share

Metro Brands Ltd: Subscribe

Metro Brands Ltd: Subscribe
  • Date

    10 Dec 2021 - 14 Dec 2021

  • Price Range

    ₹ 485 - ₹ 500

  • Minimum Order Quantity

    30

  • (D) RHP

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Metro Brands Ltd is one of the largest Indian footwear specialty retailers. They opened their first store under the “Metro” brand in Mumbai in 1955 and have since been retailing a wide range of branded products. As of September 30, 2021, Metro operated 598 Stores across 136 cities. They target the economy, mid and premium segments in the footwear market. The company owns the brands of Metro, Mochi, Walkway, Da Vinchi and J. Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop which complements their inhouse brands. They also retail footcare and shoe-care products at their stores through their joint venture, M.V. Shoe Care Private Ltd making them a ‘one-stop-shop’ for all footwear and related accessories to their customers. The retail operations are carried through “company owned and company operated” (COCO) model, retailing through their own Multi Brand Outlets (MBOs) and Exclusive Brand Outlets (EBOs). They operate Metro, Mochi and Walkway branded MBOs and Crocs™ branded EBOs. They also operate as shop-in shops (“SIS”) in major departmental stores across India. Currently, they are transitioning to omni-channel model through their websites, various online marketplaces, as well as, social media platforms (online channel make up about 12% of Sales as on 31st Sept 2021).They recorded the highest “realization per unit” of INR 1381/unit compared to the
leading players in India and highest net profit margins of 8.1% as of FY21 among the key players in India.
Objects of the issue:
The IPO proceeds shall be used towards the following purposes
  • Expenditure for opening new stores of the company under the “Metro”, “Mochi”, “Walkaway” and “Crocs” brands (INR 2.25 Bn)
  • General corporate purposes (Bal INR 0.7 Bn)
Investment Rationale:

Asset light business model with efficient operations leading to sustainable profitable growth

Metro Brands is among the few footwear retailers in India that outsources all their product manufacturing, resulting in an asset light model. This is supported by extensive (about 250 vendors) long standing third party vendor relationship, wherein they manage their inventory and supply chain. The company follows a “pull model” for product availability at their stores where product placement is led by a demand driven inventory replenishment method. This ensures optimum capital utilization and minimum stale stock, there by reducing discounting of products and improvement in gross margins. When compared with the peers (like Bata India, Relaxo Footwear) Metro has witnessed highest operating margins and net margins. In FY21, Metro had a gross margin of 54.9%, EBITDA margin of 21.3% and a profit after tax of INR 647 mn. They also have been declaring and paying out dividends consistently since FY 2000. In FY21, their dividend payout was 61.6%.

CE Info systems Ltd: Subscribe

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CE Info systems Ltd: Subscribe
  • Date

    09 Dec 2021 - 13 Dec 2021

  • Price Range

    ₹ 1000 - ₹ 1033

  • Minimum Order Quantity

    14

  • (D) RHP

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C E Info Systems Ltd (MapmyIndia) is India’s leading provider of advanced digital maps, geospatial software and location based IoT technologies. In the international markets, they operate under“Mappls” brand. They are a B2B and B2B2C market leader for maps and geospatial products in India with a comprehensive suite of “SaaS” (software as a service), “PaaS” (platform as a service) and “MaaS” (maps as a service). In addition, they also offer professional grade maps and products directly to retail customers, through their “Move” app and GPS IoT enabled gadgets/devices. Their digital maps comprehensively cover India i.e. 6.3 mn kms of roads in India, representing 98.5% of India’s road network. Also, they have recently entered into various memorandums of understanding with key government organizations such as the Indian Space Research Organization (“ISRO”), NITI Aayog and National Institute of Urban Affairs, Ministry of Housing and Urban Affairs, Government of
India to provide ‘Aatmanirbhar’, or indigenous geospatial solutions to Indian users, through continuous participation and active contribution to key initiatives in this space. They believe in the ‘Made in India’ but ‘Made for the World’ approach. On the revenue side, they charge their customers fees per period based on per vehicle, per asset, per transaction, per use case, per user, as applicable. These are in the form of subscription fees, royalties, annuities in return for providing licenses and usage rights to their proprietary digital MaaS, PaaS and SaaS offerings. Subscription fee, royalty and annuity payments together contributed over 90% of their revenue from operation for Fiscal 2021.
Objects of the issue:
The IPO aims to utilize the net proceed for the following objectives;
  • Carry out the offer for sale of up to 10.06 Mn shares
  • Achieve benefits of listing the equity shares on the stock exchange
Investment Rationale:

Strong market position built around proprietary technology and network effect resulting in high entry barriers

Their innovations in the space of digital maps, geospatial and digital transformation specifically localized for a challenging geography such as India, has helped them build a moat and create what they believe is a strong barrier to entry for companies looking to operate in India. The Geospatial guidelines provide that all digital maps and geospatial data of finer accuracy will be stored and used within domestic territories – cloud, servers, and other forms. This also gives MapmyIndia a competitive edge to partner with global brands for providing navigation related services within India. They have earned their leading market position today in the B2B and B2B2C market for digital maps and location intelligence technologies by capitalizing on their early mover advantage, creating a
niche market, developing proprietary and integrated technologies, full stack product offerings, continuous innovation and robust sustainable business model. (Source: F&S Report)

Strong presence in Tier 2 and Tier 3+ locations

As of July 31, 2022, out of the total touch points covered by the company, 86.1% of touch points were located in tier 2 and tier 3+ towns and cities which contributed about 85.6% of the total revenues of the company. With the government’s financial inclusion programs like Pradhan Mantri Jan Dhan Yojana and other direct benefit transfers in place, cash utilization and circulation is expected to grow further in tier 2 and tier 3+ towns and cities, leading to an increase in the demand for cash management services in these areas. Moreover, a higher preference for cash management services among retailers, NBFCs, restaurants, insurance companies, and railways, especially in lower-tier cities, is likely to fuel growth for the company’s business.

Valuation and Outlook:
Radiant Cash Management Services Ltd. is one of the largest players in the RCM segment in terms of network locations served in the industry. The company believes that increased financialization and formalization of theIndian economy will require a greater amount of cash to be processed and in circulation, benefitting the company in the long run. In addition, the company aims to shift its business mix towards providing more value-added services which will help to improve the margin profile. However, RCMSL is exposed to multiple operational risks and is subject to seasonal fluctuations in the end-user industries. On the upper end of the price band, the issue is valued at a P/E of 26.3x based on FY2022 earnings which we feel is on the steeper side compared to its peer
group (SIS Limited and CMS Info Systems). We, therefore, recommend an “AVOID” rating for the issue.

Shriram Properties: Avoid

  • Date

    08 Dec 2021 - 10 Dec 2021

  • Price Range

    ₹ 113 - ₹ 118

  • Minimum Order Quantity

    125

  • (D) RHP

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Shriram Properties Limited incorporated as ‘Synectics Infoway Private Limited’ on March 28, 2000 at Chennai, Tamil Nadu is one of the leading residential real estate development companies in South India, primarily focused on the mid-market and affordable housing categories. It is a part of the prestigious “Shriram Group” which is a prominent business group with four decades of operating history in India and a well-recognized brand in the retail financial services sector and several other industries .As of September 30, 2021, they have 29 completed projects, representing 16.7 Mn sq ft of saleable area, out of which 24 completed projects in the cities of Bengaluru and Chennai accounted for 90.56% of their saleable area. In addition, they have a total portfolio of 35 projects in ongoing projects, projects under development and forthcoming projects aggregating to 46.7 Mn sq ft of estimated saleable area and a land bank of approximately 197.47 Acres, with a development potential of approximately 21.45 Mn sq ft. The management has indicated that they are transitioning from a real estate development model to a combination of real estate development and service model through the use of joint-development agreements (“JDA”) with landowners or through development management (“DM”) business, whereby they provide end-to-end real estate development services to smaller real estate developers and other landowners. This DM model accounts for 31.92% of their portfolio as on of September 30, 2021.
Objects of the issue:
The IPO proceeds shall be used towards the following purposes
  • Repayment and/ or pre-payment, in full or part, of certain borrowings availed by the company and their subsidiaries
  • General corporate purposes
Investment Rationale:

Core strategy of asset light development management model and focus on mid market and affordable segment

The Company has stabilized their “DM model” having entered into definite agreements for 14 different projects and DM segment contributing 22% revenue in FY21. This allows them to earn fee income based on project development milestones achieved in terms of project sales, construction progress and customer collections, apart from reimbursement of costs and overheads. This model if scaled will allow them higher margins than their industry counterparts. In addition since inception they have been focused on the mid-market and affordable housing categories as their target segment within the residential housing market. The mid-market and affordable housing categories have accounted for significant share of overall market absorption in India in recent years. According to JLL, mid-market and affordable housing categories accounted for 74% of overall residential unit absorption during calendar year 2020.Thus as a result of this they have lower inventory levels.

RateGain Travel Technologies Ltd: Avoid

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RateGain Travel Technologies Ltd: Avoid
  • Date

    07 Dec 2021 - 09 Dec 2021

  • Price Range

    ₹ 405 - ₹ 425

  • Minimum Order Quantity

    35

  • (D) RHP

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RateGain Travel Technologies Ltd. (RTTL) is among the leading distribution technology companies globally and is the largest Software as a Service (“SaaS”) company in the hospitality and travel industry in India. The company offers travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents (“OTAs”), meta-search companies, vacation rentals, package providers, car rentals, rail, etc. RTTL is one of the largest aggregators of data points in the world for the hospitality and travel industry. In a highly fragmented landscape of travel technology providers, they offer a platform that bridges the data gap across the hospitality and travel industry. Their solutions help hospitality and travel and companies find the right guest, decide the right price, distribute it to the preferred channel of the guest and once converted, helps them have an
exceptional experience. They deliver hospitality and travel technology solutions through their SaaS platform and their products are classified into “Data as a Service”(DaaS), “Distribution” and “MarTech” ie Marketing Technology.
Objects of the issue:
The IPO aims to utilize the net proceed for the following objectives;
  • Repayment of indebtedness availed by RateGain UK, one of their subsidiaries from Silicon Valley bank (INR 853 mn)
  • Payment of deferred consideration for acquisition of DHISCO (INR 252 mn)
  • Strategic investments, acquisitions and inorganic growth (INR 800 mn)
  • Investment in technology innovation, Artificial Intelligence, and other organic growth initiatives (INR 500 mn)
  • Purchase of certain capital equipment for their Data Center (INR 408 mn)
  • General corporate purposes (Bal INR 937 mn).
Investment Rationale:

Diverse and comprehensive portfolio for revenue maximisation, backed by marquee global customers with long term relationships

As of Sept 30,2021, their customer base of 1,462 customers included 8 Global Fortune 500 companies, comprising both travel suppliers and travel intermediaries. In the hotel segment, they work primarily with large and mid-size chains including the InterContinental Hotels Group, Kessler Collection, Lemon Tree Hotels Limited along with independent hotels. They serve customers in over 110 countries, as of Sept 30, 2021 including in other parts of Asia, Europe and the United States. Their long-standing relationships with customers is evidenced by the Gross Revenue Retention which was 94.20% and 92.92% in the five months ended Aug 31, 2020 and Aug 31, 2021. On the products side, they have introduced AirGain, CarGain and FerryGain, pricing intelligence products that are custom created for the airline, car rental and cruise and ferries industry, respectively, and complement their existing pricing insights and competitive intelligence products. RTTL’s distribution platform is one of the largest processor of electronic hotel transactions, delivering advanced and affordable connectivity and distribution solutions to hotels worldwide (Source: Phocuswright Report). They are also a market leader in social media solutions and this is evident by the number of industry recognitions awarded to them on multiple occasions. These factors lead to diverse presence across globe and makes them stand out in all aspects.