Adar Poonawalla-backed Wellness Forever files for IPO. Find out more

by 5paisa Research Team Last Updated: Dec 13, 2022 - 08:51 am 50.1k Views

Wellness Forever Medicare Ltd, a pharmacy retail company backed by Adar Poonawalla-led vaccine maker Serum Institute of India (SII) Pvt. Ltd, has filed its draft red herring prospectus for an initial public offering (IPO).

The IPO comprises a fresh issue of shares to raise Rs 400 crore and an offer for sale of 1.6 crore shares, as per the DRHP filed with the Securities and Exchange Board of India. The total IPO size could be around Rs 1,500-1,600 crore.

The Mumbai-headquartered omnichannel retail pharmacy chain follows Hyderabad-based pharmacy chain MedPlus, which submitted its IPO papers in August.

Wellness Forever’s founders Ashraf Biran, Gulshan Bakhtiani, and Mohit Chavan are among those selling shares of the company in the IPO. Biran and Bakhtiani are offering 7.20 lakh shares each while Chavan is offering 1.20 lakh shares. Other shareholders will sell the remaining 1.44 crore shares.

Poonawalla’s SII, the world’s biggest vaccine maker, plans to sell 35.5 lakh shares in the IPO. It owns 66.98 lakh shares, or a 13.2% stake, in the company. Rising Sun Holdings Pvt. Ltd, another company owned by Poonawalla, will sell 15.22 lakh shares. Rising Sun holds 36.4 lakh shares, or a 7.17% stake, in the company.

Wellness Forever has raised around $21 million till date in three funding rounds from investors including Serum Institute, Adar Poonawalla, Singapore Angel Network, Amit Patni and Rajiv Dadlani.

As per the DRHP, the company plans to use Rs 100 crore to repay its loans and Rs 70.20 crore to fund capital expenditure for setting up new outlets. In addition, it will use Rs 121.90 crore to meet working capital requirements.

IIFL Securities, Ambit Pvt Ltd, DAM Capital Advisors and HDFC Bank are managing the IPO.

Wellness Forever’s business and financials

The Mumbai-based company was founded in 2008. It is the third-largest chain of pharmacy and wellness stores that sell 91,500 pharmaceutical and wellness products.

It opened its first drugstore in 2008, and has expanded its retail footprint to a total of 236 stores in 23 cities across Maharashtra, Karnataka and Goa. It serves a registered customer base of 6.7 million users as of June 30, 2021.

Citing Technopak, it said that Wellness Forever generated the highest revenue per retail square foot in the Indian pharmaceutical retail industry for 2019-20 and 2020-21.

The brand aims to strengthen its presence in tier-2 and tier-3 cities, particularly in the pharmacy e-commerce segment, a sector that is projected to grow at an annualised pace of 45%.

The company has been increasing the share of non-pharmaceutical and premium wellness products, which offer gross margins higher than 30%, in its total revenue. The share of non-pharmaceutical products rose from around 37% in 2018-19 to almost 46% in 2020-21 while the share of premium wellness products increased from 10.47% to 16.32%. Its total revenue for 2020-21 was Rs 924.02 crore, up from Rs 863.25 crore in the previous fiscal year.

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