Narayana Hrudayalaya Ltd IPO Message Board (Page 34)

Hi Uchit,

Good insights on low margins.....

Despite of this, is it a decent buy ? can the investors make listing gains ??

I liked your observation .... that... "Since last 6 years company shows excellent growth in income (25% to 30%) YtoY, but fails to generate profit."

However, have you considered that this could this be becaunlike Apollo ...NH is in an aggressive growth trajectory .. and so the ratio of matured hospitals / new hospitals is on the lower side as compared to Apollo ... therefore revenue growth maybe getting consumed in Capex ...

Pardon me ... I am not questioning your wisdom ... It''s just a thought ...

Sir
Fortis is quoting p/b of around 2 whereas NH around 6.5 or 7. This gap is extreme. I mean to say that Fortis although making losses but is having real assets per share and profit may come in future.
But ND is already planning to list @ 6.5 times its book value per share. Even if this Company generates 3 rs eps per share it will take some 70 year to have a book value of 250. Even if the Company starts earning 5 rs eps then also it will take 40 years.

Rest you can judge yourself.

let me fix my dialogue once again...
THIS WILL LOOOOOOOOOT U
THIS WILL KOOOOOOOOOT U

For me the big issue it is margin at such low margin of 1.7% compare to industry average of 14%... With regards to Fortis we should remember that it has a Pathology subsidiary bigger then Dr lal whose valuation was 4500 Cr so in real tern Fortis MC minus Pathology Subsidiary is less then 4000 Cr even if you value it path subsidiary same as Dr lal.

Septa''s point is very valid and meaningful.

Guptaji and Septa both are absolutely right. Book Value is important when you are investing in real asbased business compared to intangible asbased business. In a simple language Book Value = total property value/total nos. of shares. It should be comparable with asking price. If company goes bankrupt then investors have property. With good Book Value investors have mental satisfaction.

But for intangible asbased business like IT calculation is totally different. We don''t care about Book Value becamain assets of these companies are employees. This is the main reason why people are not investing in IT companies in early 90''s.

How much wealth did Fortis create over last 5 years? Around 17-18%, while Kovai has done near 600%. I won''t buy Fortis or NH for long term investment.

Bhai Eagle eye , just saw ur question. I couldnt ans earlier as I was looking after my 3 yr old son alone and was running after him to have his meal. Now since Septa and M Gupta have given all very valid reasons I don''t have much to say except for ki zindagi bhsr hand to mouth hi rahengey toh investors ko kya milaga? Babaji ka taloo. With such low operating ratio with no guarantee of profits even though ur gross income is increasing yr on yr shows a very poor business model even though its good for the masses. Secondly, I will put my money for it to grow and not for personal growth of the owner. When the fair value of the company is not even 50, then on what basis is 250 being asked for. Smells like fraud to me. Can u pl comment on that at least? According to you, what is the fair value of the IPO. Pl ans for the benefit of the forum. Thank you if u can reply to that.

In my view, its pricing it the major concern. However, given the clarifications by management, their most of the projects are in infant stage and hence initial provisions for depreciation and others will be high and will keep pressure on margins. But as the years passes by, this provisioning will come down and increase bottom line. Hence, it is purely a long term story. In short run depending on Grey Market, it may be considered for listing gains, otherwise just invest and forget for at least for five years to ripe rewards. Being a low cost operation model, it will take its own time for attaining major gains with the single motto of "High Volume - low margin" type of operations.

M Gupta –
My point was that Fortis is a well established Company but making losses, so why does it command a market cap of Rs.8000Cr. It has serious issues with management reputation ... they are the people who tricked Daichi and sold them Ranbaxy for a crazy valuation ...

However, if you were to consider P/B ratio then consider Apollo which has NAV of 227.87 (as on March’15) and last closing of ~Rs.1390 (as on 15/12/2015) .. .so they are currently trading at P/B of 6X

NH has NAV of 38.24 (as on March’15) and at issue price of 250 the P/B is 6.5X ... It is higher than Apollo but not by much.

And lastly, the Management reputation of NH is gilt-edged. Will you choose to ignore that aspect completely?

Septa –
Your point only adds further to my confusion ... if Fortis is to be considered as a sum of parts ... which includes the profitable Pathlab Business ... then the hospital business is even more loss making than what I originally thought .. so why does it have a positive valuation at all ? why fortis enjoys a PB of 2X .. while some PSU banks are trading are at P/B below 1X

Uchit Patel –
It is now obvious that everyone has a different basis of valuation for this Company ... some are using PE ratio some are using P/B and someone has also talked about PEG ratio ... However, no one has considered EV/EBIDTA ... I wonder why?

Also, I wonder should Hospitals be considered somewhat similar businesses to Hotels?
If so, it should be valued on per-bed Basis ... and NH is not running to full capacity as yet ... hence revenue expansion on the existing infrastructure is a real possibility. Incremental revenue will have an even greater incremental bottomline as all fixed costs are already factored in.

Nasirul Choudhury – You mentioned earlier that you will never apply for any IPO where Karvy is the Registrar ... so your rational for non-participation in NH is already explained and well-justified

Rajeev Kumar Singh –
I am a lady, as therefore addressing me as “bhai” would be inappropriate.

I am still early in the learning curve ... hence I am do not considered myself qualified to give you my opinion about the fair value of NH.

But I can assure you ... that your comment “Smells like fraud to me” is seriously misplaced. The Management is gilt-edged. You may not invest becayou consider it expensive ... but you definitely cannot find fault them in them on grounds of ethics and reputation.

Also, I believe that if the Refunds of Alkem / Dr. Lal happens on or before 21st then the participation in NH may improve somewhat.

But in the end “Bhav-Bhagwan” – GMP of NH continues to slide – currently @31-33 ... So I guess that says it all !!!

Eagle eye I sincerely did not know u were a lady so called bhai. U would understand I hope. My submission is that this stock would be gr8 story but not in near term. If someone wants a profit he might have to hold this share for very very long term maybe to the tune of 10-15 yrs. I doubt if anyone would be Williing to lock his hard earned money into something like this for such long duration. N neither I m doubting the management. Its just that its priced so steeply....that''s what smells like fraud. Also, I m not sure but I heard someone saying that 98% of the shares held by promoters are bonus shares and that too issued as recently as 6 months back. Such large quantity of bonus shares just before IPO smells like what? Coffee?

Ms. Eagleeye
since your question was for fortis, I replied accordingly. Now you want comparision with Apollo. You youeself admit that Apollo is at 6 time p/b and this NH is at 6.5. In that case it is already overvalued by 10%. Now you need to see PAT growth and ROA of Apollo and some other things also.
One more thing, in case of IPO, you need to justify valuation, but sorry to tell you madam, you are trying hard to justify why this Company should be valued above 250. You can not justify the valuation by comparing 1 point with fortis, other with appolo and so on. The fact is that this Company has nothing good to command a price of Rs. 250 except speculation.
I m telling you this will list in discount or at the best at par due to anchor investors as sugg3sted by NC. And I think this is IPO forum, everyone here wants to make some money on listing and not willing to go for 15 years.

Not just Karvy. I have stopped applying for IPO as the fight is too tough but still rarely apply for one lot like I did for Alkem after a long time but yes I will certainly buy some more to make it close to 1K or more of Alkem if it lists below 1350. I locked near 10 lakhs & got zero share in VRL I guess but I could buy as much as I want in Indigo & make good profit in a week.

However I do try to contribute & learn from others. Fortis was around 160 range in 2010 if I remember well and still at that range. Did Fortis create wealth? Does it make sense to value NH & acnhor to Fortis as the benchmark which itself didn''t create wealth.

Mr kooot-looot,indigo too was planned at 415 with retail discount if 15 rs.but ipo pricing depending on merchant bankers.....

Ha...ha...
Star Ipo, you seem to be a learned person so I accept my defeat. You may please go ahead with you application in ND. I wish you all the very best. But I will keep on posting my Lòooooot & Koooooot advice on this type of IPOs Incld ND as I am of the firm opinion that this ipo has been planned to trap the retailers. In case of a good IPO I need not gv my comment but in case of a bad IPO I has to gv my comments to alert the investors. I know most of the readers will dislike me as everyone who visits chittorgarh site is interested In applying and making quick money. My advice will certainly disherten them.
As you have decided to apply and koot money when the share lists 300, you can do so. You may please ignore my comments and I will do the same. But for others its a clear AVOID else

THIS WILL KOOOOOOOOOT U
THIS WILL LOOOOOOOOOT U

lol nice take

Very funny but true also. I fully agree. We should unite and teach lesson to greedy lead managers by not applying in such overvalued IPOs. But Promotors and lead managers need not worry as a number of investors like STAR Bhai are ready to apply at any cost. So IPO will some how sail through. Just kidding.. but Rathi bhai majja aa gaya .. kya comment mara hai.

Narayan... Narayan .....

star ipo at least he has better analysis than urs. His points are not only valid but meaningfully relevant too. Not one liners like urs with no analysis. Just comments. If u can compare Dr lals with CCD then its not worth commenting.

Star ipo, since you are new you dont know mr m gupta. His predictions are 90 percent accurate. One more thing all other experts give their aevice after hearing grey market bhav but he has the daring to say against grey market bhav. He has proved this correct many times. M Gupta''s prediction and Mr. Septa''s analysis should be respected. This time both are giving same opinion. So AVOID. Lock kiya jaaye. Final.

Neither am an analyst nor am new,but i am confident NH will list at 310 around...

I appreciate ur confidence but what is the basis of ur confidence. Enlighten us also so that it may change our views. Maybe we all r missing something which u have seen. Maybe after u tell we may also apply by gaining confidence. Will u pl. No Hawaii firing. Only data and plain facts pl.

Star Maharaj
You have every right to apply as money is yours. But please enlighten us why this should list 300+... ooops 310+....
Let me once again tell you, as far as I remember all most of Mr m gupta s advices were 100% correct even though grey market was quoting very high that time.
By the way, all the very best for your investment in Narayana.

Narayan...narayan....

Before applying please check mr Septa''s comments also.