Yatharth Hospital & Trauma Care Services's IPO saw a healthy response from investors on July 28, the final day of bidding, as they applied for 6.92 crore equity shares, against the issue size of 1.65 crore shares, buying 4.19 times.
Retail investors bid 4.27 times the allotted quota, while high-networth individuals (non-institutional investors) bought 9.10 times the reserved portion.
The part set aside for qualified institutional buyers was subscribed 0.29 percent. Qualified institutional buyers have 50 percent reservation in the public issue, including anchor book, through which the company already raised Rs 206 crore on July 25, a day before the issue opening.
Around 15 percent of the total offer, which opened on July 26, is reserved for high networth individuals, while the remaining 35 percent shares of the IPO are reserved for retail investors.
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Capital objectives
The Noida-based hospital chain intends to raise Rs 686.55 crore via a maiden public issue, at the upper end of the price band of Rs 285-300 per share. The offer comprises a fresh issue of Rs 490 crore, and an offer for sale of Rs 196.55 crore by the promoters.
The company plans to utilise proceeds from the fresh issue towards repaying debts, capital expenditure towards hospitals, and inorganic growth initiatives.
Headquartered in Noida, Yatharth Hospital operates three super-speciality hospitals in Uttar Pradesh, and one multi-speciality hospital in Madhya Pradesh, which was acquired in 2022, taking a total bed capacity to 1,405 beds.
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What analysts are saying
CRISIL estimates the Indian healthcare delivery industry to post a healthy 11.3 percent CAGR in FY23-27, driven by long-term structural factors, increasing affordability, and the potential of the Ayushman Bharat scheme.
BP Equities believes that growing healthcare infrastructure and increasing penetration of medical insurance will benefit Yatharth Healthcare and Trauma Care Services in the long run.
On the financial front, the company has witnessed steady growth in its top and bottomlines, with the PAT margin growing from 8.57 percent to 12.64 percent, and its ROE (return on equity) improving from 25.06 percent to 35.95 percent during the FY21-23 period.
Moreover, the company is likely to retire debt from the IPO proceeds which is expected to improve its profitability going ahead, said BP Equities which recommended subscribing to the issue.
Currently, the debt-to-equity ratio is 1.4 on FY23 basis, which is much higher than its peers, though improved from 2.57 in FY21, which was a concern.
"The company operates in a highly competitive segment. Their high fixed costs may negatively affect their profitability. Additionally, unfavorable pricing on medical supplies or the inability to pass on cost increases to payers could further impact their profitability. Keeping in mind the pros & cons of the company, cash surplus investors can invest in the issue," Sushil Finance said.
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