MedPlus Open To Quick Commerce, Keeping Watch On Customer Preference: CEO

MedPlus Health Services Ltd. is keeping a watch on customer preference for quick delivery of medicines and if the demand rises, the company will successfully foray into the quick commerce space, according to Chief Executive Officer Madhukar Reddy.

"We will watch the overall situation as it unfolds very carefully and see if the customer preference is for quick delivery, in which case we can easily do it," he told NDTV Profit in a conversation on Thursday. "I think they are more than willing to pay for the delivery cost."

A key factor for the pharmacy chain to foray into the quick commerce space will be how the fill rate compares with the speed. Fill rate refers to the percentage of orders the company fulfils without running out of stock. 

Reddy acknowledged the challenges posed by the vast number of stock keeping units and varying demand across regions.

"There's always going to be a trade-off between fill rate and speed. If you want the full fill rate, you cannot really get it in 10 minutes or 20 minutes.

"But we are still not quite sure if the trade-off between fill rate and speed is going to be favourable towards speed by the customers. If it is, then we will definitely do that," the top executive outlined. 

Entering the new segment won't affect the company’s margins, according to Reddy. "Even today, we charge Rs 20 per delivery. So, we'll probably hike it slightly if the speed has to be increased, but I don't see that as a big lag."

If there is any benefit, it will probably come from some of the general goods, which will also end up selling along with the medicines. That will be additional sales, he highlighted. 

The company has around 450 stores in each of the cities it operates in. A portion of these can be easily converted into delivery points to do quick commerce delivery, Reddy said.

Commenting on the financial performance of the company in FY26, Reddy expressed optimism over reaching an Ebitda and profit growth of 20–25%. "Pretty possible, given that private label continues to grow, I think our growth in profit should be higher than the topline growth."

The pharmacy chain is expected to achieve high-single digit sales growth for FY26, the CEO said. "Profit-wise, I think we'll actually become much more profitable as we move forward."

The company is targeting the addition of 600 new stores in FY26. Reddy expressed confidence in funding this expansion internally, noting that the company has around Rs 400 crore of cash. He estimated the cost for these new stores, including inventory, to be around Rs 170 crore to Rs 180 crore.

A key strategy is the continued growth of its private label products. These products currently contribute around 14% to the company's top line. It now accounts for approximately 20% to 21% of its medicine sales in terms of maximum retail price, up from zero in June 2023.

Reddy anticipates a slower but steady growth rate of around 1% per quarter for private label contributions over the next six to eight quarters. He remains optimistic about long-term potential, predicting a "tipping point" as consumer awareness about generics increases.