Medanta Owner Global Health’s IPO Day 1: The IPO of Global Health Ltd (GHL), popularly known by its brand name Medanta, comes at a time when hospital chains are gaining significant investor attention. The Rs 2,206 crore IPO, with a combination of Offer for Sale and fresh issue, operates five hospitals in north and east India Plans to increase bed capacity by 40 per cent in 3-4 years.
Medanta said that it has mobilised Rs 662 crore from anchor investors ahead of its initial public offering (IPO) that opens for public subscription on Thursday. The company has set a price band of Rs 319-336 a share for the initial share sale which will conclude on Monday, November 7, 2022.
Global Health IPO: Price band
It has been fixed between Rs 319 and Rs 336 per equity share of face value Rs 2 each.
Global Health IPO: Offer Details
Founded by cardiologist Naresh Trehan, the company is planning to raise about Rs 2,119 crore- 2,206 crore through this issue. It includes a fresh issue of Rs 500 crore, comprising 1.49-1.57 crore shares and an offer for sale (OFS) of Rs 1,169 – Rs 1,706 crore, comprising 5.08 crore equity shares by promoters and shareholders.
The OFS by selling shareholders includes the sale of 5.07 crore shares by Anant Investments and 1 lakh equity shares by Sunil Sachdeva and Suman Sachdeva. The company will not get any proceeds from the OFS portion. Those proceeds will entirely go to the promoters.
Post the issue, the promoter shareholding will fall to 33 per cent from the current 35 per cent.
Of the total offer size, 75 per cent of the net offer will be reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.
Global Health IPO: Objective
Of the net proceeds from the fresh issue, Rs 375 crore will be invested in the company’s subsidiaries. They, in turn, will utilise the fund for prepayment/repayment of debt. Residual funds will be used for general corporate purposes.
Global Health IPO: Financials
During the financial year ending March 2020, the company generated revenues to the tune of Rs 1,480 crore. Revenues in FY21 came in at Rs 1,418 crore while the company reported revenue of Rs 2,166 crore during FY22. During the three-month period ending June 2022, its revenues stood at Rs 596 crore. During the same period last year, revenues were Rs 472 crore.
Revenues have grown at a CAGR of 20 percent over FY20-22, led by an eight percent CAGR in bed capacity. Occupancies improved to 60 percent and average revenue per operating bed (ARPOB) grew by 4 percent over the same period.
Global Health IPO: Strengths and Concerns
Global Health is recognised for clinical expertise, especially in dealing with complicated cases, and it focuses on clinical research and academics. It works on the principle of ‘doctor-led’ hospitals which are driven by skilled and experienced doctors in the healthcare space.
It has large-scale hospitals with sophisticated infrastructure, medical equipment and technology and focuses on under-served areas with a dense population. At the same time, it is present in the top or capital cities of large states (NCR, Lucknow and Patna). The company has immense growth opportunities in existing facilities through diversification into new services, including digital health.
Global Health is highly dependent on doctors, nurses and other healthcare professionals and whether it will be able to attract / retain skilled professionals is a concern. The other concerns include lower hospital bed occupancy rate, difficulty in reviving loss-making subsidiaries and continued subdued business through medical tourism.
Global Health IPO GMP Today
As per market observers, Global Health shares are available at a premium (GMP) of Rs 19 in the grey market today. The company’s shares are expected to list on leading stock exchanges BSE and NSE on Wednesday, November 16, 2022.
Shares will be allotted to successful bidders on November 11, and the refund to unsuccessful bidders will be credited on November 14. Shares will be credited to the demat account of the successful bidders by November 15 and the stock will debut on the bourses on November 16.
Global Health IPO: Should You Invest?
Many brokerages remain positive on the issue and suggest subscribing to it, citing decent valuations, growth prospects and robust business model. However, higher expenses are a major risk for the company, they said.
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 Reliance Securities.
It 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 demands an EV/Sales multiple of 4 times, which is lower than the peer average, said Choice Broking.
“Considering the strong long-term structural factors and the anticipated business growth of the company we assign a ‘subscribe’ rating for the issue,” it said in its IPO note.
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