By: Tavaga Research
Post attaining SEBI’s go-ahead for the initial public offering, Nureca Ltd.’s IPO is all set to open for subscription from 15th February 2021, i.e., today, and will remain open till February 17. The company could garner Rs 44.55 crore from two anchor investors on 12th February 2021 as per the filings done with SEBI. The price band for Nureca IPO is between Rs. 396 and Rs. 400 per share. Details for the IPO are as follows:
Utilisation of funds
The amount raised would be utilized by the company for the below purposes:
- Incremental working capital requirements
- General corporate purposes
Nureca Ltd. – Company Overview
Founded in 2016, Nureca Limited began its operations with a mission to offer the finest and contemporary mechanisms to deal with chronic diseases and help patients to improve their quality of life.
Nureca Limited is a B2C company engaged in the home healthcare and wellness products’ business enabling its customer to improve their lifestyle. The company believes in fulfilling the ever-growing needs of the household healthcare sector by way of catering to new products and innovative techniques.
The company sells and markets its offerings through online channel partners such as e-commerce websites, retailers, and distributors. Nureca is predominantly a digital-first company. Moreover, the company has its own in-house website as well through which it sells the products (https://drtrust.in/).
At present, more than 90% of the revenues for Nureca come through online channels. However, in October 2019, the company joined hands with Tata group’s Croma in order to sell its healthcare and wellness products and eventually expand its business footprint through offline channels as well.
Shareholding Pattern
Industry Overview
In 2019, the home healthcare market was pegged at Rs. 20,757 crore and is expected to grow by 11% (on a CAGR basis) to reach Rs 38,920. 70 crores by 2025. The drivers of this market mainly include the growing burden of chronic ailments, increasing spending capacity of individuals, and growing awareness of Health and Well-being.
Home Healthcare market share in 2019
Product Portfolio
Nureca Ltd classifies its products in the following five categories:
Nureca Limited financials (in Rs Crore)
From FY 2018 to FY 2020, the company’s revenue from operations has grown at a CAGR of 122.68%; and the profit has grown at a CAGR of 43.35% during a similar period.
Key Strengths
Focus on innovation, quality, and growth
Nureca Limited has a solid product portfolio and a persistent focus on quality growth and innovation
Asset light business model
Along with innovation, quality, and high investments in research and development, the company believes in the optimal sizing of its equipment. The company has to date focused on building an asset-light business model by not heavily investing in land and property, plant and machinery, thus ensuring capital efficiency
Experienced management
While it’ll be too early to comment anything about the corporate governance habits of the company, the promoter of Nureca Ltd. has an experience of more than 10 years in the home healthcare segment. Apart from the promoter, the rest of the senior management is well in-sync with the changing lifestyle habits of individuals (as per DRHP)
Weaknesses
Threat of competitors
Innovations can sometimes work in the favour of competitors. With company consistently focusing on innovation, the competitors too, can develop similar products and sell them with attractive deals compared to Nureca Ltd.
Heavy reliance on innovation
Lesser testing of newly developed products can prove to be costly. Generally, products manufactured after deploying heavy R&D investments are not time-tested. Company, having relied heavily on innovative products since the beginning, could experience failure of its entire unit if products don’t cater to the needs of changing client preferences
Covid-19, no more a severe threat
While the company has caught eyeballs due to higher spending by individuals staying in urban areas into health and well-being due to the impact of Covid-19, things could start getting difficult for the company with things normalizing over the course of time
The threat of global players
The healthcare product line is quite competitive. If global players start entering Indian markets with better deals for the customers, Nureca’s margins could get severely impacted
Nureca Limited Risk Factors
Reliance on third party
The company heavily relies on various third parties to manufacture its products. If the organizations stop manufacturing for Nureca, or fail to adhere to the FDA norms, the business could get affected
Distribution
The company depends upon e-commerce partners, some distributors, and retailers. Given the threat of various global entities, failing to manage the distribution network effectively could lead to the company’s performance getting affected adversely
Failing to ensure intellectual property protection
Company’s ability to market and commercialize technology could be affected if it fails to obtain and protect intellectual property rights. Others could emulate similar technologies to commercialize their products
The threat of product failures
Any major product failure to the specialized tools developed could adversely affect the business, reputation, and operating margins
Brand awareness
If the company fails to maintain and enhance the brand or manage it cost-effectively, the underlying business of the company could take a hit
Important things to know before subscribing
- While the company aims to utilize the proceedings for incremental working capital requirements, and general corporate purposes, Nureca also expects to benefit from the visibility it will get post listing of the equity shares
- The fresh issue offering is relatively lower than the standard practice making the company a micro-cap post listing
- The company could mobilize funds from only two anchor investors
Nureca Limited IPO FAQs
- What is the Nureca Limited IPO?
Nureca Limited will be aiming to raise Rs 100 crores via a fresh issue in order to fund its objectives
2. How to apply to Nureca Limited IPO?
Interested investors can search for the IPO page of broking accounts
3. When will the Nureca Limited IPO open?
The Nureca Limited IPO will open on 15th February 2021
4. When will the Nureca Limited IPO close?
The Nureca limited IPO will be closed for subscription on 17th February 2021
5. What is the tentative schedule of Nureca Limited IPO?
| IPO Open Date | 15th February 2021 |
| IPO Close Date | 17th February 2021 |
| Basis of Allotment Date | 23rd February 2021 |
| Initiation of Refunds | 24th February 2021 |
| Listing Date | 26th February 2021 |
Disclaimer: The above write-up is only for informational purposes. Kindly do not treat this as a recommendation to subscribe to the IPO.