VLCC Health Care Ltd., founded by Mrs. Vandana Luthra in 1989, has evolved into one of India’s leading players in the wellness and beauty industry. Known for its wellness clinics, personal care products, and institutes for skill development in beauty and nutrition, VLCC has established a strong brand presence over the years. Now, the company is set to launch its Initial Public Offering (IPO) to raise funds for future growth.
Company Overview
VLCC started as a single beauty and weight management center in New Delhi and has grown into a prominent brand with over 330 locations across 150+ cities in India and 12 countries, including South Asia, Southeast Asia, and the Gulf Cooperation Council (GCC) region. The company’s offerings include wellness programs, weight management solutions, personal care products, nutraceuticals, and skill development training through its branded VLCC Institutes.
The company operates through three core business segments:
- VLCC Wellness Clinics: Branded clinics offering beauty and wellness services.
- VLCC Personal Care Products: A range of skin-care, hair-care, and body-care products.
- VLCC Institutes: Skill development centers providing education in beauty and nutrition.
VLCC Health Care IPO Details
The VLCC IPO aims to raise ₹300 crores through fresh issue shares, which will be used for various purposes, including brand development, expanding wellness clinics, and investing in digital infrastructure. The issue includes both fresh shares and an offer for sale by existing shareholders.
Here are the key details of the IPO:
| Details | Information |
| Total Issue Size | ₹300 crore |
| Issue Type | Book Built |
| Stock Exchange | NSE, BSE |
| Fresh Issue | ₹300 crore |
| QIB Portion | 75% |
| NIB Portion | 15% |
| Retail Portion | 10% |
VLCC Health Care IPO Objectives
The company plans to use the net proceeds from the IPO for several key objectives:
- Debt Repayment: Prepay certain borrowings to improve financial stability.
- Expansion: Open new wellness clinics in India and the GCC region and refurbish existing clinics.
- Digital and IT Infrastructure: Enhance infrastructure to improve customer experience and operational efficiency.
- Research & Development (R&D): Invest in R&D to innovate and stay ahead of competitors.
Why Should You Invest in VLCC Health Care IPO?
- Market Leadership: VLCC is one of the largest and most successful brands in the beauty and wellness industry, with over 30 years of experience and a trusted brand reputation.
- Growing Market: The Indian beauty sector is projected to grow at a CAGR of 10-12% in the next five years, presenting strong growth potential for VLCC.
- Integrated Business Model: The company operates across three business segments—wellness clinics, personal care products, and skill development institutes—offering a comprehensive approach to wellness.
- Global Expansion: VLCC has expanded its operations to international markets, including the GCC region, and has 20 wellness clinics across the UAE, Qatar, Bahrain, Kuwait, Oman, and Kenya.
- Strong Financial Performance: The company has shown improved margins and profitability in recent years.
Financial Performance
Here’s a look at VLCC Health Care’s latest financials:
| Particulars (₹ Crores) | FY2021 | FY2020 | FY2019 |
| Revenue from Operations | 532.92 | 769.57 | 852.43 |
| EBITDA | 150.12 | 147.89 | 123.30 |
| EBITDA Margin (%) | 26.6% | 19.1% | 14.3% |
| Profit After Tax (PAT) | 6.24 | -15.41 | -48.68 |
| EPS (₹) | 1.62 | -4.09 | -12.93 |
Despite the challenges posed by the pandemic in FY2020, VLCC has bounced back with improved profitability, as reflected in the significant reduction in losses and the positive PAT in FY2021. The company’s EBITDA margin has also improved over the years, showing better operational efficiency.
Strengths of VLCC Health Care
- Brand Recognition: VLCC is a well-established brand with a strong reputation in the beauty and wellness market.
- Diversified Product Portfolio: The company offers a wide range of products under VLCC Natural Sciences, including skincare, haircare, and nutraceuticals.
- Industry Leadership: With over 30 years of experience, VLCC has earned the trust of customers and enjoys a strong market position.
- International Presence: The company operates in the GCC region, East Africa, and Southeast Asia, further strengthening its global footprint.
Risks of Investing in VLCC Health Care IPO
- Pandemic Impact: The COVID-19 pandemic has affected the company’s operations, and further disruptions could impact its business.
- Franchise Model Risks: The company’s reliance on franchisee operations might affect its brand image and business consistency.
- Intense Competition: The beauty and wellness sector has low entry barriers, leading to increased competition and potentially impacting future cash flows.
Conclusion: Should You Invest?
VLCC Health Care’s IPO presents an interesting investment opportunity, especially for those looking to invest in the growing wellness and beauty sector in India. The company’s strong brand presence, diversified offerings, and growth prospects make it an appealing choice for long-term investors. However, investors should consider the risks, particularly the impact of economic disruptions and competition, before making an investment decision.
If VLCC’s IPO is priced attractively compared to its peers, it could be a solid addition to an investor’s portfolio, given the sector’s positive growth outlook in the coming years.
Source:
