Metro Brands, Medplus Health, Data Patterns, HP Adhesives, Supriya Lifescience IPOs this week. What should you pick?
While MapmyIndia closes for subscription on December 13, Medplus Health Services, Data Patterns India, HP Adhesives, and Supriya Lifescience will launch their IPO during December 13-17.
As MapmyIndia closes for subscription on December 13, five other IPOs will keep the primary markets abuzz for the next few days this week. Bidding for Rakesh Jhunjhunwala-backed Metro Brands will end on Tuesday.
Medplus Health Services, Data Patterns India, HP Adhesives, and Supriya Lifescience will launch their public offers during December 13-17.
Specialty footwear retailer Metro Brands was subscribed 27 percent on day one of its IPO. It is looking to raise Rs 1,367 crore from the issue at a price band of Rs 485-500 per share. The IPO is trading at a premium of Rs 30 in the grey market, as per data from IPO Watch, and is expected to list on December 22.
Medplus Health Services, one of India’s largest pharmacy retailers, on the other hand, looks to raise Rs 1,398 crore from the market at a price band of Rs 780-796 per share. Data Patterns India, a defense and aerospace electronics solutions provider, is aiming for Rs 588 crore at Rs 555-585 per share. The two companies were trading at a premium of Rs 250 and Rs 500, respectively, in the grey market and will likely list on December 23 and 24.
Adhesives and sealants company HP Adhesives is looking to raise Rs 126 crore at a price band of Rs 264-274. The issue will open for subscription on December 15 and is likely to be listed on December 27.
Supriya Lifescience is a manufacturer of active pharmaceutical ingredients and one of the largest exporters of chlorpheniramine maleate and ketamine hydrochloride in India. It will open for subscription on December 16 and is looking to raise Rs 700 crore at a price band of Rs 265-274 per share.
A week older in the primary market, Tega Industries, Anand Rathi Wealth, and RateGain Travel Technologies, have received a strong response, being subscribed 219 times, 9.8 times, and 17.4 times, respectively.
Now, what should the investors go for? Let’s check out what analysts have to say.
Sumeet Bagadia, Executive Director¸ Choice Broking
We are positive about Metro Brands and Medplus Health Services IPO and advising clients to subscribe to the issue.
Metro has a wide range of brands and products catering to all occasions across age groups and markets and is an asset-light business with an efficient operating model. It also has an experienced board and senior management team.
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In terms of valuations, the post-issue TTM P/E works out to 91x (at the upper end of the issue price band), which is high considering MBL’s historical topline and bottom line CAGR of 9 percent and 6 percent, respectively, over FY18-20. Further, the company’s historical net profit growth is low, compared to its peer Relaxo Footwears. We believe the positives are captured in the valuations commanded by the company.
Medplus, on the other hand, is the second-largest pharmacy retailer in India in terms of the number of stores as of March 31 and revenue from operations.
It has been adding value proposition to the customer in terms of two-hour delivery, competitive pricing, and a wide range of pharmaceutical and FMCG products. It also has a strong execution track record of store expansions, from 48 in 2006 to more than 2,300 in 2021.
Also read: Grey Market Premium
However, rising competition from companies like Apollo Pharmacy, Tata 1mg, Netmeds, and others is a cause for concern.
Abhay Agarwal, Founder, Piper Serica
We like Medplus for its scale, store-level efficiency, strong operating metrics, and dependable management team. In India, organized pharmacy retail is at a very nascent stage and is expected to show exponential growth. We looked at Data Patterns, but we believe PSU defense companies will always be the first choice in the defense sector.
Diva Sharma, Founder, Green Portfolio
The pricing of these upcoming IPOs has been done on the aggressive side. It will be difficult for these companies to sustain such aggressive valuations as there are incumbent businesses available at more reasonable valuations. We like Data Patterns out of the lot.
Data Patterns may see a 30-50 percent listing gain since it is a niche player in the defense and aerospace electronics solutions space. It also has an innovative business model, sound order book, and profitable track record.
Sonam Srivastava, Founder, Wright Research
This week, we believe the most attractive IPO is Data Patterns. It is a small IPO in the defense sector, currently trading at +70 percent GMP, which is extremely attractive because of its track record of profitable growth. It is a strategic defense and aerospace electronics solutions provider with an innovation-focused business model and a healthy order book.
Medplus Health also commands a hefty GMP because of its strong brand name and customer value proposition. Metro Brands is one of India’s largest Indian footwear specialty retailers with a strong history of profitability and growth and is an excellent long-term hold.
Astha Jain, Senior Research Analyst, Hem Securities
Hem Securities has a ‘subscribe’ rating to Metro Brands, MapmyIndia, Medplus Health Services, and Data Patterns.
If anyone has limited funds to deploy in these IPOs, then the pecking order will be CE Info Systems (MapmyIndia) on top, followed by Data Patterns, Medplus Health Services, and Metro Brands.
We recommend ‘subscribing’ to the Metro Brands issue for long-term gains. The company is bringing the issue at a price-to-earnings (P/E) multiple of more than 150x on post-issue FY21 earnings per share (EPS), which makes the valuation a little stretched.
The company’s efficient operating model through deep vendor engagements and theory-of-constraints (TOC) based supply chain, and asset-light business with sustained profitable growth indicates strong future potential.
Medplus is an established brand, offering value propositions to customers, and has a successful track record of expansion using a distinct cluster-based and replicable store unit expansion approach.
The company’s high-density store network enhancing omnichannel proposition and lean cost structure with experienced management makes the issue strong for the long term.
Data Patterns can be subscribed for both listings as well as long-term gains since the company is well-positioned to benefit from the Make-in-India opportunity. Its innovation-focused business model with sound order book and consistent track record of profitable growth due to a scalable business model makes this issue attractive.
SOURCE: IPO INFO