Medplus Health Services (Buy)

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Target: ₹1,340

CMP: ₹811.20

Medplus Health Services Ltd (MHSL) is the second-largest player in India’s retail pharmacy segment, operating a robust network of 4,552 stores as of H1FY25 and holding an organised market share exceeding 10 per cent. Its store network spans across 12 States, with a strong focus in southern India, which accounts for about 70 per cent of its outlets.

MHSL has been actively expanding its presence into tier 2 and smaller cities within its core markets, tapping into high-growth potential areas. In the recent years, MHSL has accelerated the store opening process and has been aggressive on that front. MHSL generates around 99 per cent of its revenue from pharmacy operations, the remaining generating from other ancillary segments like diagnostic and optical.

Considering MHSL’s extensive presence as the second-largest retail pharmacy chain in India and its maturing store network, we expect significant growth in revenue per store, which would lead to a growth of 17 per cent CAGR over FY24-27E in the overall revenue. Improvements in EBITDA margins are likely to be supported by an increasing share of private-label products and a higher proportion of matured stores, which typically deliver better profitability.