Why Nureca Share Price is Falling

Editor's note: Share price of Nureca surged over 15% today, i.e., 20 January 2023.

In fact, Nureca has remained in focus for the past one month, ever since the Covid outbreak in China affected equity markets, and improved sentiment for pharma companies.

Nureca, which is into healthcare and wellness segment, saw a decent rise in the last week of December 2022 when the Indian government announced measures to control the spread of Covid in India.

Despite the recent rally, Nureca shares are still down from the peak touched in January 2022.

Continue reading to find out why the share price was taken to the cleaners in the year gone by.

Why Nureca Share is Falling

No company is always good in every year. They have ups and downs as per market conditions.

Take the example of Paytm or Zomato.

Zomato saw a bumper listing as retail investors fueled the subscription numbers at the time of its initial public offer (IPO).

In the next couple of months, the loss-making company that burns cash every year, had a market capitalisation of Rs 1.4 trillion (tn) at its peak.

Other fundamentally strong stocks like Jubilant etc, which generated massive profits, were trading at half the valuations of Zomato.

For Paytm shareholders, there was no respite since listing as the stock is down a massive 70%.

Now, as pessimistic as it sounds, it's possible that Nureca might become another Paytm like debacle in near future. At least the market is predicting this with similar movement in share price.

In 2022 so far, share price of Nureca is down 72%.

When the company launched its IPO last year, investors showed enthusiastic participation which led to 59% gains on listing day.

The healthcare and wellness products distributor company listed at Rs 635 over its issue price of Rs 400. The issue was oversubscribed 39.9x times, with retail category leading charge (166.7x).

Skip forward to present and shares are trading near 52-week lows, falling in every trading session.

Let's find out why Nureca shares are falling.

Why Nureca Share is Falling

#1 Weak quarterly results

If you chart out quarterly results of Nureca for the past 4 quarters, the year-on-year (YoY) change and sequential change is painted in red.

Take a look at the tables below:

Rs m, consolidated	Sep-22	Sep-21	%	Jun-22	Jun-21	%	Mar-22	Mar-21	%	Dec-22	Dec-21	%
Revenue	367.8	469.4	-22%	255.3	1194.8	-79%	410.5	318.4	29%	480.8	594.7	-19%
Operating Profit	-30.2	81.4	-137%	-45.6	492.3	-109%	-10.3	56.5	-118%	68.6	87.0	-21%
OPM (%)	-8%	17%		-18%	41%		-3%	18%		14%	15%
PAT	-28.9	54.3	-153%	-41.3	362.0	-111%	-14.0	38.9	-136%	47.3	63.0	-25%
PAT Margin (%)	-8%	12%		-16%	30%		-3%	12%		10%	11%

Data Source: Ace Equity

The company has reported losses for three consecutive quarters after staying in the green for a long time.

Demand has seen a dip in 2022 as compared to the same period last year. Last year, Nureca saw a huge surge in demand due to Covid-19.

It witnessed acceleration in consumers demand shifting from offline channels to online channel. Nureca, which is solely focused on digital sales channel, was a key beneficiary.

But this year, Nureca's margins were impacted due to lower demand, inflation in input cost, currency fluctuation as well as inflationary pressure in other non-core costs such as packaging, transport, etc.

Employee cost has also increased recently due to aggressive talent acquisition.

For several quarters now, the company has struggled to maintain its growth at minimal levels which has resulted into a massive drop in the share price.

#2 FII selling

In the most recent September 2022 quarter, Nureca's shareholding patterns shows a massive fall in foreign investors (FII) holding.

As of June 2022, Nureca had FII holdings of 12.04%. In the September 2022 quarter, this reduced to just 1.67%.

It appears a big foreign investor has exited the stock and dumped the holding in the retail individual category.

Individual holdings have steadily increased in Nureca.

Shareholding Pattern of Nureca

Quarter Ending	21-Mar	21-Jun	21-Sep	21-Dec	22-Mar	22-Jun	22-Sep
FII (%)	10.51	12.42	13.57	13.02	12.22	12.04	1.67
Individuals (%)	4.49	4.32	5.5	5.18	8.49	8.54	25.85

Source: Equitymaster

Could this be a typical example of retail investors catching a falling knife? No one knows for sure at the moment.

Update: The latest shareholding pattern for Nureca is out and it shows that FIIs once again divested their stake in the company.

In fact, FIIs have almost completely exited from the company. In the September 2022 quarter, they held 1.67% stake which was reduced to 0.1% by December 2022.

There's more...even promoters of the company have sold a massive stake recently.

Promoter holding in the company stood at 70% as of September 2022 which came down to 63% by December 2022.

When the promoter, Payal Goyal, sold stake in November 2022, shares of Nureca touched an all-time low.

How the stock has performed recently

Today, Nureca fell 4% to hit a new low of Rs 540 on the BSE.

It has a 52-week high of Rs 2,175 touched on 31 December 2021.

In the past one month, Nureca has fallen 30% while in the past five days, the stock is down 16%.

Shares of Nureca have been in a free-fall. So far in 2022, they are down 73%.

Since listing, Nureca is down 18%.

Take a look at the table below which compares Nureca with its peers on important metrics.

Comparative Analysis

Company	Nureca	White Organic	Balaxi Pharma	A1 Acid	Evexia Lifecare
ROE (%)	24.6	0.6	53.5	14.9	1.2
ROCE (%)	33.5	1.4	59.6	15.2	2.9
Latest EPS (Rs)	-3.7	0.3	54.4	5.5	0.1
TTM PE (x)	0.0	46.3	10.6	55.3	237.1
TTM Price to book (x)	2.9	0.7	3.9	7.4	1.4
Dividend yield (%)	0.5	0.0	0.1	0.5	0.0
Industry PE (x)	119.9
Industry PB (x)	8.3

Data Source: Ace Equity, Equitymaster

About Nureca

Nureca is a medical equipment and supplies company engaged in the business of home healthcare and wellness products under the brand "Dr. Trust".

It sells products through online channel partners such as e-commerce players, distributors, and retailers.

The company has a presence in both online and offline channels. Currently, 95% of revenue comes from e-commerce and digital channels.

To know more, check out Nureca's financial factsheet.

You can also compare Nureca with its peers:

Nureca vs Zenlabs Ethica

Nureca vs Aarey Drugs

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...