February 25, 2021 Thursday, 22:03 Hrs
 Home |   IFCI Group  |   About Us  |   Our Network  |   Contact Us  |   Career
SENSEX  51,039.31  257.62 
BSE
Home   IPO   New Issue Details   
Research reports on IPO companies. These reports focus on the company profile, company’s strengths and weakness, in the current scenario. It also provides valuation of company’s financials and objective of the issue.
New Issue Details
Saturday, February 13, 2021 Click here for Rating Reckoner
Nureca
In the business of home healthcare and wellness products
CM RATING32/100
Incorporated in November 02, 2016, Nureca is a B2C company engaged in the business of home healthcare and wellness products. The company has a diversified product portfolio, which primarily caters to home healthcare sector. The company has most of the product lines supporting home health market in India, making it a one-stop solution provider. The company enables its customers with tools to help them monitor chronic ailments and other diseases, to improve their lifestyle.  

The promoter of the company is Mr. Saurabh Goyal who is the the chairman and managing director of the company. Saurabh Goyal holds 3,499,979 equity shares, representing 46.67% of the pre issue equity share capital of the company. Promoter along with promoter group, collectively hold an aggregate of 6,999,993 equity shares, aggregating to 93.33% of the pre issue equity share capital of the company. 

Nureca became a wholly owned subsidiary of Nectar Biopharma Private Limited on August 16, 2018. Pursuant to the scheme of arrangement between Nectar Biopharma Private Limited (NBPL) and Nureca and their respective shareholders, sanctioned vide an order dated April 29, 2020 of the National Company Law Tribunal, Mumbai, Specified Undertaking (as defined in the Scheme of Arrangement) was demerged from NBPL and vested into Nureca with the appointed date for such transfer being April 1, 2019. 

Prior to the scheme of arrangement, Nureca entire issued and paid-up share capital comprising 10,000 equity shares was held by NBPL (9,999 equity shares) and Saurabh Goyal (holding on behalf of NBPL) (1 equity shares) which were subsequently cancelled. Subsequent to the sanctioning of the scheme of arrangement, Nureca allotted 1,000,000 equity shares to the shareholders of NBPL of which 500,000 equity shares and 500,000 equity shares were allotted to Saurabh Goyal and Payal Goyal respectively, representing 46.67% and 46.67% of its paid-up capital respectively. 

Currently, Nureca classifies its products portfolio under the following five categories such as-

Chronic Device Products - which includes products such as blood pressure monitors, pulse oximeters, thermometers, nebulizers, self monitoring glucose devices, humidifier and steamers

Orthopedic Products - which includes rehabilitation products such as wheelchairs, walkers, lumbar and tailbone supports and physiotherapy electric massagers.

Mother and Child Products - which includes products such as breast pumps, bottle sterilizers, bottle warmers, car seats and baby carry cots.

Nutrition Supplements - which includes products such as fish oil, multivitamins, probiotics, botin, apple cider and vinegar.

Lifestyle Products - which includes products such as smart scales, aroma diffusers and fitness tracker. 

The company majorly outsources the manufacturing of its products to certain foreign vendors and as well as certain vendors in India. It exercise control and regular supervision over the manufacturing operations at the facilities of its manufacturing partners through its personnel who is stationed close to such facilities or through a third party arrangement who periodically visit these facilities for inspection enabling it to efficiently carry out production changes in designs or quality of products required. Further outsourcing the manufacturing of its products allows it to increase production capacity as required and without incurring additional capital expenditure, by utilizing additional capacity with existing plants or entering into agreements with new plants. 

The company designs its products internally. It contract with its manufacturers and vendors to manufacture its products. Typically, its manufacturers and vendors help to manufacture its products based only on the design and technical specifications provided by it. The technical specifications it provides include a detailed description of the components to ensure quality, overall technical compatibility and consistency with design. 

The raw materials used in the products include mono carton, inner corrugated box, batteries, batteries cover and bottom case for blood pressure monitor. These materials are readily available from several manufactures located around the globe, including India. 

The following brands are currently being used by the company for its existing product range

Dr. Trust: This is Nureca flagship brand. The products catered under the Dr. Trust brand enables the users to effectively monitor chronic alignments and improve their lifestyle.

Dr. Physio: This brand is used for products under Orthopedic category such as electric massagers, wheelchairs and walkers. It offers the most imaginative, unwinding, restorative, wellbeing and individual care products.

Trumom: This brand is used for products under mother and child care category which offers mother care and child care products to enhance the parenthood experience. 

The company has recently set up a manufacturing unit in Chandigarh on July 28, 2020. Nureca can do final assembly of its products in its manufacturing unit pursuant to the purchase of equipment's brought in semi knock down condition from various sources, branding, labelling and packaging suitable for marketing and transport in India. It also repairs the defective or damaged equipment which has been sold before in the market in its manufacturing facility. Its manufacturing team of over 4 full-time employees is responsible for managing contractor relationships, logistics, production oversight, quality control and new product development. The installed capacity of the unit is 60000 units per annum. The assembling plant is operating at 20% of installed capacity. 

The company sells its products through online channels partners such as e-commerce players, distributors and retailer. Further, it also sells the products through its own website drtrust.in. Currently, 95% of revenues come through digital channels (e-Commerce). It has a dedicated marketing team comprising of 21 employees as on December 31, 2020. For Fiscal 2020 and Fiscal 2019, its advertising expenses on a consolidated basis were Rs 3.13 crore and Rs 2.31 crore, respectively, or, 3.15% and 3.74% of its consolidated revenue from operations, respectively. 

Nureca, in October 2019, joined hands with Croma, India's first omni-channel electronics retailer from the Tata Group, to emerge as the very first company to sell healthcare and wellness products through Croma stores. As part of this tie-up, Nureca will sell products from its Dr Trust and Dr Physio brands at 30 Croma stores across the country, and this would grow with the increasing adoption of the products.

Income tax raid on Promoters 

Search and seizure operations were conducted at residences of promoter Saurabh Goyal, members of the promoter group Aryan Goyal, Payal Goyal and Smita Goyal by officials from the income tax department from December 13, 2020 to December 15, 2020 in the case of Nectar Lifesciences Limited alongside Sanjiv Goyal, Raman Goyal, Aryan Goyal, Saurabh Goyal, Payal Goyal and Smita Goyal. Search and seizure operations were also conducted on residence of one of its director Rajinder Sharma by officials from the income tax department on December 13, 2020 in the case of Nectar Lifesciences Limited and Avensis Exports Private Limited. None of the individuals have received further communication from the income tax authorities. Any adverse determination by the tax authorities in this matter could increase the tax liability and which may result in taxation and other proceedings against such individuals and may also affect the reputation of Nureca. 

Promoter Saurabh Goyal had entered into family partition deed dated September 10, 2020 executed between Saurabh Goyal and includes his wife Smita Goyal, brother Aryan Goyal and includes his wife Payal Goyal and his father Sanjiv Goyal and includes his wife Raman Goyal. The family partition deed is for the separation of Saurabh Goyal and Aryan Goyal from their father Sanjiv Goyal including his wife Raman Goyal. Sanjiv Goyal is the promoter and director in a pharmaceutical company known as Nectar Life Sciences Limited. Sanjiv Goyal and Aryan Goyal parted their ways from their father Sanjiv Goyal and had gifted their holding in Nectar Life Sciences i.e. 243,000 equity shares and 290,000 equity shares, respectively, on July 25, 2019 to Sanjiv Goyal. Further to the disassociation, Sanjiv Goyal and Raman Goyal and any entity in which Sanjiv Goyal and Raman Goyal may have an interest are not included in the promoter Group of Nureca 

Nureca had submitted an exemption application dated November 10, 2020 with SEBI seeking an exemption from identifying Nectar Life Sciences Limited as the 'group companies' of the company, as Promoter Sanjiv Goyal has disassociated with Nectar Life Sciences Limited pursuant to the family partition deed dated September 10, 2020 and Nureca promoter, directors and key managerial personnel are not connected with Sanjiv Goyal and his wife Raman Goyal in any manner. Subsequently, such exemption was granted to us by SEBI vide its letter bearing number SEBI/HO/CFD/DIL1/YJ/KBOW/P/2021/1/582 dated January 11, 2021.

The Offer and the Objects 

The offer comprises of a fresh issue of 2500000 equity shares at upper price band of Rs 400 and 2525253 equity shares at lower price band of Rs 396 aggregating up to Rs 100 crore by the company. 

The net proceeds of the fresh Issue are proposed to be utilized towards funding incremental working capital requirements of the company and general corporate purposes.

Strengths 

The home health market in India and neighbouring countries is pegged at Rs 20,757 crore in 2019 and is expected to grow to Rs 38,920.7 crore by 2025 at a CAGR 11%. The growth is driven by rising awareness of health and wellness, increasing spending power, growing burden of chronic diseases, and the need for healthcare stakeholders to reduce healthcare costs. 

The company operates on an asset light business model which does not require it to invest heavily on physical assets such as plant and machinery, land and property and therefore this business model allows it to be capital efficient. The company believes its business model is scalable, such that it can expand its geographical reach and distribution capacity and add new products efficiently and at a relatively low cost without disrupting its existing business. 

Home healthcare helps reduce hospital visits, thereby reducing hospital induced infections. The raging COVID-19 pandemic and fear of infection has pushed people towards virtual visits and home health products where hospitalization was not necessary e.g. digital blood pressure monitors, nebulizers, thermometers etc. 

Healthcare providers aim to discharge patients early with the home health devices supporting monitoring. Sale of home health devices provides an additional revenue stream. The basic parameters including heart rate, oxygen saturation, respiratory rate, skin temperature, ECG readings, non-invasive blood pressure can be monitored using remote devices or mobile health (mHealth) solutions. The hospitals and insurance companies benefit from remote monitoring and reduced adverse events. 

Nureca focuses on creating innovative products with an emphasis of quality and efficiency. Further, they focus that their products are adhered to the most stringent European CE mark and United States' Food and Drug Administration (FDA) guidelines. Based on their experience Nureca has focused on investing in experience based product innovation that are most relevant in creating the consumer experience. 

The company has received 66 trademark, 6 copyrights and 92 designs registrations and applied for 12 trademark registrations. 

Weaknesses 

The company depends on third parties to manufacture its products. If these organizations are unable or unwilling to manufacture its products, or if these organizations fail to comply with FDA or other applicable regulations or otherwise fail to meet its requirements, business will be harmed. 

The company is dependent on third parties in relation to its distribution and sales. All its products are distributed and sold through its website, third party e-commerce platforms and other channels of retail, over which it has limited control. 

The markets in which the company operates are highly competitive in terms of pricing, product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.

 The company has a very limited operating history. The company is subject to all the business risks and uncertainties associated with setting up any new business venture, which may adversely affect its business, prospects, results of operations and financial condition. Assessing the future prospects of the business is challenging in light of both known and unknown risks and difficulties it may encounter. 

The availability of look-alikes, counterfeit healthcare devices, primarily in domestic market, manufactured by other companies and passed off as the company's products, could adversely affect its goodwill and results of operations. 

Nureca manufacturing facility located in Chandigarh have been obtained on leasehold basis from Raman Goyal, mother of Saurabh Goyal. Saurabh Goyal has disassociated himself from his parents Sanjiv Goyal and Raman Goyal pursuant to a family partition deed entered with Sanjiv Goyal along with his wife Raman Goyal on September 10, 2020. In the event that any lease or sub-lease agreement is not renewed, the company will be required to expend time and financial resources to locate suitable land or building to set up its operations. 

The company is subject to rigorous regulation by the FDA and numerous other state and central governmental authorities. To varying degrees, each of these authorities monitors and enforces compliance with laws and regulations governing the development, testing, clinical study, manufacturing, labelling, packaging, marketing and distribution of healthcare devices. These laws and regulations are subject to change and to evolving interpretations which could increase costs, prevent or delay future device clearance or approvals, or otherwise adversely affect its ability to market currently cleared or approved devices.

Valuation 

For the fiscal ended March 31, 2020, sales were up by 61% to Rs 99.43 crore. However OPM fell 490 bps to 9.7% which led to marginal 7% increase in operating profit to Rs 9.69 crore. Other income decreased 29% to 6 lakh while interest cost jumped 217% to Rs 77 lakh and depreciation 556% to Rs 37 lakh. PBT decreased 3% to Rs 8.61 crore. Tax expenses were down 15% to Rs 2.21 crore as result net profit rose 3% to Rs 6.4 crore. 

In H1FY21 revenues stood at Rs 122.15 crore while OPM jumped to 40.3% resulting OP of Rs 49.18 crore. PBT stood at Rs 48.65 crore while net profit was Rs 36.18 crore. The company has shown impressive growth in sales in first six months of FY21 which may be mostly due to fear of COVID-19 pandemic and patients avoiding visiting hospitals and clinics which led to increase in sales. However, as the situation is normalizing, market growth too should settle to an earlier growth trajectory. The E-commerce adoption strategy by the company is working very well and should continue to do well going forward. 

For FY2020, the consolidated EPS on post issue equity was Rs 6.4. The upper price band of Rs 400 discounts the FY20 EPS by 62.5 times. There is no other comparable listed company. 

Nureca: Issue Highlights
Fresh issue (in Rs crore)100
Price Band (Rs)396-400
For Fresh Issue Offer size (in no of shares )
- in Upper price band2500000
- in Lower price band2525253
Pre issued capital (Rs crore)7.50
Post issue capital (Rs crore)
- in Upper price band10.00
- in Lower price band10.03
Pre issue promoter shareholding (%)93.33
Post issue Promoter shareholding
-On higher price band (%)70.00
-On lower price band (%)69.82
Bid Size (in No. of shares)35
Issue open date15/02/2021
Issue closed date17/02/2021
ListingBSE, NSE
Rating32

  

Nureca: Financials
Particulars1803 (12)1903 (12)2003 (12)2009 (06)
Total Income20.0561.9099.43122.15
OPM21.814.69.740.3
Operating Profits4.389.069.6949.18
Other Income0.020.090.060.83
PBIDT4.399.149.7650.01
Interest0.060.240.771.18
PBDT4.338.908.9848.82
Depreciation0.010.060.370.18
PBT Before EO4.328.848.6148.65
EO0.000.000.000.00
PBT after EO4.328.848.6148.65
Provision for Tax1.212.622.2112.47
Profit after Tax 3.116.236.4036.18
Share of loss of JV0.000.000.000.00
Net Profit3.116.236.4036.18
PPA0.000.000.000.00
Net profit after PPA3.116.236.4036.18
EPS (Rs)*3.16.26.4#
*EPS is on post issue equity capital of Rs 10 crore of face value of Rs 10 each
# EPS not annualized due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

Powered by Capital Market - Live News

New Listing
Company Listing Price(Rs)
Stove Kr... 498.00
Home Fir... 618.80
Indigo P... 2607.50
more
Search IPO
Open an Account
Online Trading
Tutorial
Become a
Sub-Broker