Wellness Forever Medicare IPO : 7 things to know

Wellness Forever Medicare Ltd, the Mumbai based pharmacy chain had filed for its IPO in October 2021. In the third week of February, the company had got the approval from SEBI for its proposed IPO. The final dates are yet to be announced and it is most likely that the issue may be put off to the next fiscal year as most of the issuers would want to avoid clashing their IPOs with the LIC IPO, considering its potential to absorb a big chunk of market liquidity.

The IPO of Wellness Forever Medicare Ltd will be a combination of a fresh issue and an offer for sale by promoters and early shareholders.

7 important things to know about Wellness Forever Medicare IPO

1) Wellness Forever Medicare Ltd has filed for an IPO in the range of Rs.1,500 crore to Rs.1,600 crore. The issue comprises of a fresh issue of Rs.400 crore and an offer for sale or OFS of Rs.1,200 crore. Wellness Forever Medicare Ltd runs one of the largest pharmacy chains based out of Mumbai and it has a very strong retail presence in the state of Maharashtra.

Incidentally, this will be the second major IPO by a pharmacy chain, the first being Medplus IPO by the Hyderabad based pharmacy chain.

2) Out of the total issue of Rs.1,600 crore, let us look at the OFS portion first. The OFS will entail the sale of stocks worth Rs.1,200 crore approximately by the core early investors and the promoters of the company. The OFS will be for a total of 1.60 crore shares and while the value of the OFS will finally depend on the price band, the OFS portion is expected to be around the range of Rs.1,200 crore.

The major sellers in the OFS include 7.20 lakh shares by promoters Ashraf Biran and Gulshan Bhahtiani while another 1.20 lakh shares will be sold by Mohan Ganpat Chavan. The chunk of the 1.44 crore shares will be sold by the other institutional shareholders who came in as early investors.

Adar Poonawala owned Serum Institute of India is also an early backer of this company and the Serum Institute as well as Adar Poonawala in his personal capacity will be participating in the offer for sale to dilute their stake in Wellness Forever Medicare Ltd.

3) The Wellness Forever Medicare IPO of Rs.400 crore fresh issue portion will be used for a combination of capital expenditure, debt reduction and working capital purposes. Out of the total fresh issue portion of Rs.400 crore, the company plans to spend Rs.70.20 crore on funding capital expenditure to further business.

In addition, Wellness Forever Medicare Ltd plans to allocate nearly Rs.100 crore to meet its borrowing repayment and prepayment. Another Rs.122 crore out of the fresh proceeds will be utilized by the company for working capital requirements on a continuous basis. 

4) Wellness Forever Medicare Ltd was floated in the year 2008 at the height of the global financial crisis and has built a smart franchise since then. Its store network has growth from 144 stores in March 2019 to 236 stores in the year 2021.

Wellness Forever Medicare Ltd has a robust presence in 23 cities spread across the states of Maharashtra, Karnataka and Goa. The company employs more than 4,200 persons on its rolls. Wellness Forever Medicare Ltd is already the third largest pharmacy in India. 

5) Most of the pharmacy stores of Wellness Forever Medicare Ltd are 24X7 stores and they also provide a self-browsing and differentiated shopping experience. They also offer a call centre based facility of placing centralized orders for home delivery. For the financial year ended FY21, Wellness Forever Medicare Ltd reported net revenues of Rs.924 crore as compared to Rs.863 crore in the previous fiscal year. 

6) Wellness Forever Medicare Ltd has positioned itself in the fast growing retail pharmacy market. However, this segment is likely to see increased from the online portal based pharmacies like PharmEasy, NetMeds and 1MG. Of these, NetMeds is backed by the Reliance group while 1MG is backed by the Tatas. PharmEasy is tapping the IPO market to raise nearly Rs.7,000 crore. In short, Wellness Forever Medicare Ltd is going to be up against rather deep pockets.

7) The IPO of Wellness Forever Medicare Ltd will be lead managed by IIFL Securities, Ambit, HDFC Bank and DAM Capital Advisors (formerly IDFC Securities). They will act as the book running lead managers or BRLMs to the issue.
 

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