Target: ₹820
CMP: ₹724.65
In its FY24 annual report, Medplus Health Services has highlighted key levers of growth such as deeper penetration in its core markets with a focus on tier-2 and beyond locations ( about 50 per cent of stores in these markets) to optimise operational processes and inventory management and plans to add 600+ stores in FY25.
Increasing private label share by capitalising its scale and expanding its product range and looking to scale-up its own branded generics under “Medplus” brand.
Gross Merchandising Value was at ₹747 crore, represented 10.70 per cent of pharmacy sales on a GMV basis and 8.31 per cent on net sales in FY24 and expanding customer engagement by leveraging its local presence and diversified product offerings.
Strengthening operating efficiencies in supply chain, infrastructure enhancement and direct procurement approach from pharma manufacturers to help gross margin improvement.
We see a gradual margin improvement, led by a better mix with steady growth in mature stores (2+ years; about 9-10 per cent margin), an increasing share of margin-accretive private-label and Medplus-brand generics, and an efficient supply chain.
We have marginally tweaked our EBITDA for FY25/26 and retain TP to ₹820 (17x Q1FY27E EV/ EBITDA, which implies 28x pre-INDAS EV/EBITDA).