Global Health operates and manages hospitals under the Medanta brand and the issue is open for subscription till November 7. Investors can bid for a minimum of 44 equity shares and in multiples thereof.
The IPO consists of a fresh issue of equity shares aggregating to Rs 500 crore and an offer for sale (OFS) of up to 5.08 crore equity shares from its promoters and existing shareholders.
As a part of the OFS, Anant Investments, an affiliate of private equity major Carlyle Group and Sunil Sachdeva (jointly with Suman Sachdeva), will offload equity shares.
The net proceeds from the fresh issue will be utilised towards repayment or prepayment of borrowings, in full or part, of the subsidiaries, GHPPL and MHPL and general corporate purposes.
Global Health is one of the largest private multi-speciality tertiary care providers operating in the North and East regions of India. It has a network of four hospitals in Gurugram, Indore, Ranchi, Patna and Lucknow.
As of June 30, 2022, the company provided healthcare services in over 30 medical specialities and engaged over 1,300 doctors led by experienced department heads. The operational hospitals have 2,467 installed beds.
Founded by Naresh Trehan, a renowned cardiovascular and cardiothoracic surgeon, Global Health is backed by private equity investors such as Carlyle Group and Temasek.
The company has reserved 50% of shares for qualified institutional buyers, whereas non-institutional investors will get 15% of shares. The remaining 35% shares have been allocated to the retail bidders.
For the year 2021-22, the company reported a profit after tax (PAT) of Rs 196.2 crore with a revenue of Rs Rs 2,205.82 crore. Its PAT stood at Rs 58.71 crore with total revenue at Rs 626.54 crore for the period ended June 30, 2022.
Capital Company, Credit Suisse Securities (India), Jefferies India and are the book-running lead managers to the IPO, whereas KFin Technologies is the registrar to the issue.
Global Health mobilised Rs 662 crore from anchor investors ahead of its IPO as it allocated 1.97 crore equity shares at Rs 336 apiece, according to a circular uploaded on BSE website.
Government of Singapore, Nomura, Axis Mutual Fund (MF),
MF, Aditya Birla Sun Life MF, MF, MF, Kotak MF, Max Life Insurance Company and are among the anchor investors.
The majority of the brokerages remain positive on the issue and suggest subscribing to it, citing its decent valuations, growth prospects and robust business model. However, higher expenses are a major risk for the company.
Here is what the brokerage firms said about the initial public offering of Global Health:
Despite the challenging environment, the company has leveraged its large-scale hospitals with world-class infrastructure, high-end medical equipment and technology to record decent operational and financial performance, said the brokerage.
Reliance Securities has recommended subscribing to the issue in the view of strong clinical expertise, focus on clinical research and academics, focus on under-served areas with dense population, presence in top capital cities of large states, decent brand equity, experienced management team and valuation comfort.
At the higher price band, Global Health is demanding an EV/sales multiple of 4 times, which is lower than the peer average, said Choice Broking. It believes that the IPO is attractively priced.
“Considering strong long-term structural factors and the anticipated business growth of the company, we assign a ‘subscribe’ rating for the issue,” it added in its IPO note.
The company is looking for value-accretive opportunities while strengthening its presence in key growth markets, said Religare Broking. “We believe the IPO is available at a better valuation and investors can subscribe to the issue.”
It plans to invest in bed capacity expansion, enhance technology, train healthcare professionals as well as focus on preventive healthcare, the brokerage said.
The valuations are in line with its peers like
, and . It has better revenue and PAT growth over two years, but the return on equity and the company faces near-term headwinds, it said.
Amid high dependence on third-party suppliers, a highly competitive industry and worsening economic conditions, which may slow the business, the brokerage has a neutral view on the issue.
An increase in total bed capacity and an improvement in occupancy rates across hospitals can further aid margins. It has already seen a strong operating performance in its Lucknow hospital and expects an improvement in the performance of Patna hospital.
“As the share of international revenue gradually increases, it will aid the operating performance. Debt reduction at the subsidiary level will lead to better profitability ratios,” it added with a ‘subscribe’ rating for the issue.
Rating: Subscribe for listing gains
There is huge growth in the healthcare sector and the super specialization market in India is highly under-penetrated. This puts Global Health in a strong position to further grow and expand into different geographies, it said with a ‘subscribe for listing gain’ tag.
“The company primarily focuses on under-penetrated and underserved geographies with dense populations and government schemes such as Ayushman Bharat Scheme present it an opportunity to expand in such under-served areas and reach the low-income population,” it added.
Rating: Subscribe for long term
The major proportion in this issue is the offer for sale, which could be a limiting factor for this issue. The promoter shareholding would come down to 33% post-IPO, which is another concern, said the brokerage.
“It has generated strong revenue growth in the last 3 years, with a minor setback in FY21. The issuer has good patient volumes and cost efficiency, and its financial profile also shows an increasing trend,” it added with a ‘subscribe for long term’ rating.