Asset-light Business Model
The business model of the company relies on its ability to design products, through optimal sizing from a suitable manufacturer/vendor and its long-standing relationship with vendors. The company enters into agreements with vendors who manufacture its products as per the company’s specifications, which allows it to scale operations quickly at a pre-determined cost and as per its quality standards without incurring any capital expenditure on manufacturing facilities. 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.
Quality and Innovation Focused
The quality is a pre-requisite for a positive consumer experience and long-term brand loyalty. In order to offer new and varied products to its customers, Nureca focuses on creating innovative products with an emphasis of quality and efficiency. Further, it focuses that the products are adhered to the stringent CE and FDA guidelines. Based on its experience, Nureca has focused on investing in experience-based product innovation that are most relevant in creating the consumer experience.
Combination of Technical Know-how and Understanding of Consumer Preference
The company believes that its brands i.e., Dr. Trust, Dr. Physio and Trumom have built a reputation of introducing innovative products. The company combines its technical know-how with an understanding of the Indian home healthcare market developed through market feedback and extensive interaction with its vendors. Through these efforts, the company seeks to be the first to introduce innovative products in the market.
The Home Health Market in India and neighbouring countries is estimated at Rs. 20,757.0 crores in 2019 and is expected to grow to Rs. 38,920.7 crores by 2025 at a CAGR 11.0%. Nutritional Supplements Segment forms ~86% of the total Home Health Market, followed by Chronic Disease Products segment at 6.5%. Highest growth is expected in Lifestyle products, especially Fitness trackers, at CAGR 14.5%, but the other product segments are also growing at robust, similar growth rates between 2019 and 2025.
Growth Drivers for Home Healthcare Market and Product Adoption:
Restraints to Growth for Home Healthcare Market and Product Adoption:
Nureca Limited (Nureca) is a B2C company engaged in the business of home healthcare and wellness products. The company enables its customers with tools to monitor chronic ailments and other diseases. It is a digital-first company wherein it sells products through online channel partners such as e-commerce players, distributors and retailers. Further, it also sells the products through its website drtrust.in. It provides a product mix to the customers and their preferences thereby targeting a wider customer base.
Currently, Nureca classifies its products portfolio under the 5 categories such as:
The company operates in a highly fragmented and competitive industry where numerous unorganized players along with various multinational brands compete, which results into pricing pressure and Nureca is no exception to this scenario. Further, we believe that due to the Covid-19 pandemic, the home healthcare products witnessed a surge in demand which reflects in the company’s performance during H1FY21, however as people will come out of this pandemic, the demand scenario may not sustain going forward which may in turn affect the performance of the company. Further, current revenues are largely generated from selling third-party/assembled imported devices and any change in the Government policies may impact the business. The company's own assembling plant operates at only 20% capacity utilization with a team of just 4 employees. At the higher price band of Rs. 400, the issue is valued at 44x/8x of FY20/H1FY21 EPS.
|Particulars (Rs. Crores)||FY 2018||FY 2019||FY 2020||H1 FY 2021|
|Gross Profit Margin (%)||0.45||0.35||0.35||0.61|
|Employee Benefit Expenses||0.36||0.89||3.16||1.09|
|Earnings Before Interest and Tax||4.37||9.00||9.32||49.00|
|Profit Before Tax||4.32||8.84||8.61||48.65|
|Profit After Tax||3.11||6.23||6.40||36.18|
|Earnings Per Share||4.45||8.89||9.14||51.69|