The company imports, manufactures and distributes various medical consumables and machines.
They are exclusive distributors of SWS Hemodialysis Care Co. Ltd. China, JMS Co. Ltd. Japan, and Zoncare Biomedical Electronics Co. Ltd.
Their products cater to renal care, cardiovascular diseases, respiratory disease, radiology, and critical care.
Their manufacturing unit is ISO certified.
The IPO proceeds have been used to purchase machinery which will allow them to manufacture JMS meditape (bulk of their revenues). They have also benefited from a long-standing relationship with JMS, to secure molds for manufacturing other products.
They also provide turnkey solutions like Dialysis center setup, blood bank setup, dental clinic setup etc.
With current OPM at 10%, there is plenty of room for margin expansion.
The company has low debt levels.
The promoters while not technocratic, have been in the business for over 20 years. The second generation is also involved. This shows their commitment and ability to grow despite a non-technical background.
The future is bright because industry itself is gaining massive push by government and demand too will increase as India gets older.
Risks:
Unlike their larger competitor – Poly Medicure, the company’s market share is low and manufacturing is yet to take off in a big way. The IPO proceeds should help.
The non-technical background of promoters could turn out to be a hindrance to growth.
At a PE of 25, the stock is fairly valued. Margin expansion will be key to permanent re-rating of multiple.
They are dependent on Chinese companies for some of their products. So, if there is any China related problem in the future, their operations will be impacted.
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