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Review By Dilip Davda on July 22, 2023
• The company is a north region-centric healthcare service-providing hospital chain.
• It has posted steady growth in its top and bottom lines for the reported periods.
• With healthcare awareness and insurance coverages, bed occupancy is expected to pick up in coming years.
• YHTCSL is empanelled with many healthcare schemes and agencies.
• Investors may park funds for medium to long-term rewards.
ABOUT COMPANY:
Yatharth Hospital & Trauma Care Services Ltd. (YHTCSL) is a north region-centric private hospital chain company. It started with its first hospital in Greater Noida in November 2010 and since then it has been on an expansion spree. As of the filing of this offer document, it had four operational hospitals in the northern regions with 1405 beds. As of March 31, 2023, it had 609 doctors engaged on their panel for servicing the patients.
Its Greater Noida, Noida and Noida Extension hospitals were one of the largest hospitals in the region. The overall average bed utilization has been around 50% for all these hospitals containing approximately 87% occupancy in Greater Noida (commenced in 2010) while its latest Jhansi-Orchha hospital (commenced in 2022) has around 9% bed occupancy.
YHTCSL is empanelled with several third-party health insurance administrators, non-life insurance companies, ESIC (Employees State Insurance Corp.), CGHS (Central Government Health Schemes) as well as public and private sector undertakings. YHTCSL's Noida Extension and Greater Noida hospitals are the 8th and 10th largest private hospitals and are having a major thrust on introducing new specialties in healthcare services to remain at the forefront.
Post the pandemic, as health awareness and insurance coverage have increased, preference for a good healthcare service provider has been on the rise and such trends are likely to continue in coming years. As of March 31, 2023, it had 3303 individuals engaged with the company including 178 resident medical officers, 267 consulting doctors besides 164 visiting doctors.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden combo book-building route IPO of a fresh equity issue worth Rs. 490 cr. (approx. 16333350 shares at the upper cap) and an Offer for Sale (OFS) of 6551690 shares (worth Rs. 196.55 cr. at the upper cap). It has announced a price band of Rs. 285 - Rs. 300 per share and mulls mobilizing Rs. 686.55 cr. at the upper price band with the overall issue size of 22885040 equity shares. The issue opens for subscription on July 26, 2023, and will close on July 28, 2023. The minimum application to be made is for 50 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 26.66% of the post-IPO paid-up capital of the company. The company has allocated 50% for QIBs, 15% for HNIs and 35% for Retail investors.
From the net proceeds of the Pre-IPO and IPO fresh equity issue, it will utilize Rs. 100.00 cr. for repayment/prepayment of certain borrowings of its own, Rs. 145.00 cr. for repayment/prepayment of certain borrowing of its subsidiaries, Rs. 25.64 cr. for capex on Noida and Greater Noida Hospitals, Rs. 106.97 cr. for capex on hospitals operated by its subsidiaries, AKS and Ramraja, Rs. 65.00 cr. for inorganic growth through acquisitions and the rest for general corporate purpose.
As the company did a pre-IPO placement worth Rs. 120 cr. on July 06, 2023, at a price of Rs. 300 per share, its fresh public issue is reduced to that extent and now the fresh equity shares issue will be for Rs. 490.00 cr. against Rs. 610 cr. planned.
The three joint Book Running Lead Managers (BRLMs) to this issue are Intensive Fiscal Services Pvt. Ltd., Ambit Pvt. Ltd., and IIFL Securities Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue.
Having issued initial equity capital at par, the company issued further equity shares in the price range of Rs. 20 to Rs. 300 between July 2012 and July 2023. It has also issued bonus shares in the ratio of 3 for 1 in March 2022. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 4.55, Rs. 4.81, Rs. 5.33, Rs. 5.38, Rs. 5.49, and Rs. 6.34 per share.
Post-IPO, YHTCSL's current paid-up equity capital of Rs. 69.52 cr. will stand enhanced to Rs. 85.85 cr. Based on the upper price band of the IPO pricing, the company is looking for a market cap of Rs. 2575.51 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, YHTCSL has (on a consolidated basis) posted a turnover/net profit of Rs. 229.19 cr. / Rs. 19.59 cr. (FY21), Rs. 402.59 cr. / Rs. 44.16 cr. (FY22), and Rs. 523.10 cr. / Rs. 65.77 cr. (FY23). Thus it posted a steady growth in its top and bottom lines. During these three fiscals, its PAT margin grew from 8.57% to 12.64% and its ROE improved from 25.06% to 35.95%.
For the last three fiscals, it has reported an average EPS of Rs. 7.77 and an average RoNW of 34.75%. The issue is priced at a P/BV of 10.74 based on its NAV of Rs. 27.93 as of March 31, 2023, and at a P/BV of 3.25 based on its post-IPO NAV of Rs. 92.37 per share (at the upper cap).
If we attribute FY23 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 39.16. Thus the issue appears fully priced based on its current financial status, but it is poised for the bright prospects ahead.
Post-IPO, the company will turn into a debt-free company as it is likely to clear most of its debts from IPO proceeds. It will help in saving interest costs and improve profitability.
DIVIDEND POLICY:
The company has not declared/paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Apollo Hospitals, Fortis Healthcare, Narayana Hrudayalaya, Max Healthcare, Krishna Institute of Medical and Global Health as their listed peers. They are currently trading at a P/E of 68.96, 262.87, 79.27, 84.52, 59.67, and 72.21 (as of July 21, 2023). However, they are not truly comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
The three BRLMs associated with the offer have handled 36 public issues in the past three fiscals, out of which 11 issues closed below the IPO price on the listing date.
Review By Dilip Davda on July 22, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Yatharth Hospital and Trauma Care Services Limited offers an early investment opportunity in Yatharth Hospital and Trauma Care Services Limited. A stock market investor can buy Yatharth Hospital IPO shares by applying in IPO before Yatharth Hospital and Trauma Care Services Limited shares get listed at the stock exchanges. An investor could invest in Yatharth Hospital IPO for short term listing gain or a long term.
Read the Yatharth Hospital IPO recommendations by the leading analyst and leading stock brokers.
Yatharth Hospital IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Yatharth Hospital IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Yatharth Hospital IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Yatharth Hospital IPO.
The Yatharth Hospital IPO allotment status will be available on or around August 2, 2023. The allotted shares will be credited in demat account by August 4, 2023. Visit Yatharth Hospital IPO allotment status to check.
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