Yatharth Hospital IPO: An Attractively Priced Investment Opportunity
The eagerly anticipated IPO date of Yatharth Hospital and Trauma Care Services Limited has been announced, and it is set to open for subscription on July 26, 2023. As a prominent multi-care hospital chain in India, Yatharth Hospital has earned a reputation as one of the top 10 largest private hospitals in the Delhi National Capital Region (NCR). With its impressive 450-bed facility located in Noida Extension, Uttar Pradesh, and two other super specialty hospitals in Noida and Greater Noida, the company stands strong in the healthcare industry.
Yatharth Hospita IPO Details and Price Band
The IPO size for Yatharth Hospital is Rs 687 Crores, and it comprises both an Offer for Sale (OFS) and a fresh issue. Under the OFS, existing shareholders will be selling shares, and the proceeds will go to them, with no benefit to the company. On the other hand, the fresh issue will raise Rs 490 Crores, with the aim of funding capital expenditure for the civil construction of the building, interior development, and purchasing equipment/machinery for the new SMT production line. Additionally, the funds will be used for long-term working capital requirements, loan repayments, and general corporate purposes.
The IPO price band is set at Rs 285 to 300 per share, which has attracted considerable attention due to its reasonable valuation in comparison to its industry peers.
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Yatharth Hospital IPO Details
| IPO Opening Date | 26-Jul-23 |
| IPO Closing Date | 28-Jul-23 |
| IPO Listing Date | 24-Jul-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 285 to Rs 300 per equity share |
| Lot Size | 50 Shares |
| Min Order Quantity | 50 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 687 Crores |
| Fresh issue | Rs. 490 Crores |
| OFS | Rs. 197 Crores |
Yatharth Hospital and Trauma Care Services Ltd Financials
Here are the financials of the company.
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|
| Total Assets | 287.2 | 308.8 | 486.0 | 426.0 |
| Total Revenue | 146.2 | 229.2 | 523.1 | 402.6 |
| Profit After Tax | -2.1 | 19.6 | 65.8 | 44.2 |
| Profit % | -1.40% | 8.55% | 12.57% | 10.97% |
| Net Worth | 54.3 | 72.5 | 183.0 | 116.9 |
| Total Borrowing | 184.6 | 186.1 | 263.8 | 258.2 |
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Valuation Analysis
When considering Yatharth Hospital’s valuation, the P/E ratio based on the last fiscal year’s EPS stands at approximately 30x. If we take into account the last three years’ weighted EPS, the P/E ratio comes out to be around 39x. In comparison, the industry average P/E ratio is 66x, with Healthcare Global Enterprises being the highest at 151x and Narayana Hrudalaya being the lowest at 33x.
Given these valuation metrics, Yatharth Hospital’s IPO price band of 30x to 39x appears reasonably priced, especially when compared to the sky-high valuations of some of its peers.
Grey Market Premium (GMP)
The Grey Market Premium (GMP) is a significant indicator of market sentiment towards an IPO. Currently, the GMP for Yatharth Hospital IPO stands between Rs 50 to Rs 60, representing an approximate 20% premium. This indicates positive interest and expectations from investors regarding the IPO’s potential.
Competitive Strengths
Yatharth Hospital boasts several competitive strengths that make it an attractive investment opportunity. Being one of the leading super specialty hospitals in the Delhi NCR region, the company enjoys a diverse specialty and payer mix, ensuring a robust patient base. Its advanced medical equipment and technology, coupled with the ability to attract skilled doctors, nurses, and paramedical staff, are critical contributors to its success. Furthermore, the experienced and qualified professional management team with a strong execution track record adds to the company’s credibility.
What is the IPO Market Lot?
| Application | Lot Size | No. of Shares | Amount |
| Retail – Minimum | 1 | 50 | 15,000 |
| Retail – Maximum | 13 | 650 | 1,95,000 |
| S-HNI Minimum | 14 | 700 | 2,10,000 |
| B-HNI Minimum | 68 | 3350 | 10,05,000 |
Positive Factors to Consider
- Stable Operating and Financial Performance: Over the past four years, Yatharth Hospital has displayed positive growth trends in its financials. Total assets have steadily increased from Rs 287.2 Crores in FY20 to Rs 426.0 Crores in FY23. Total revenue witnessed significant growth, peaking at Rs 523.1 Crores in FY22. Despite a loss in FY20, the Profit After Tax steadily improved, reaching Rs 44.2 Crores in FY23.
- Reasonably Priced IPO: The IPO’s price band, considering the P/E ratio, is reasonably priced compared to its peers in the healthcare industry. This may present an attractive opportunity for investors looking to capitalize on the company’s potential growth.
Risk Factors
As with any investment, there are certain risks associated with Yatharth Hospital IPO that investors should consider:
- OFS Proceeds: It’s crucial to note that the company will not receive any proceeds from the Offer for Sale. The net proceeds from the OFS will go to the selling shareholders.
- Market Valuation: The IPO price, market capitalization to revenue multiple, and price to earnings ratio may not accurately represent the company’s market price upon listing or in the future.
- Impact of COVID-19: Being a healthcare provider, Yatharth Hospital has faced challenges due to the COVID-19 pandemic and strict restrictions. This has negatively affected their business operations and financial performance. The company may also face operational, reputational, medical, and legal challenges, including claims of malpractice and medical negligence, which could harm their reputation and prospects.
- High Fixed Costs: The company’s high fixed costs may negatively affect its profitability. Additionally, unfavorable pricing on medical supplies or the inability to pass on cost increases to payers could further impact profitability.
- Deployment of Funds: The company’s plans to invest in capital expenditure and repay borrowing, but there may be delays or changes in the deployment of funds. Moreover, a significant portion of the proceeds is earmarked for a non-operational hospital that incurred losses in Fiscal 2023.
- Integration Challenges: The acquisition of a new hospital may pose integration challenges that could affect the overall performance of the company.
Yatharth Hospital IPO Allotment & Listing Dates
| IPO Opens on | 26-Jul-23 |
| IPO Closes on | 28-Jul-23 |
| Basis of Allotment | 02-Aug-23 |
| Initiation of Refunds | 03-Aug-23 |
| Credit of Shares to Demat | 04-Aug-23 |
| Listing Date | 07-Aug-23 |
| Cut-off time for UPI mandate confirmation | 28-Jul-23 |
Should You Invest in Yatharth Hospital IPO?
Before making any investment decision, it’s essential to weigh the potential returns against the associated risks. Investors with a high-risk appetite who understand the market dynamics and are confident about the growth prospects of Yatharth Hospital may find this IPO appealing. However, it’s crucial to conduct thorough research, read the red herring prospectus (RHP), and consult with financial advisors before making any investment.
In conclusion, Yatharth Hospital’s attractively priced IPO presents an interesting investment opportunity, given its strong competitive position, stable financial performance, and reasonable valuation. However, investors must carefully assess the risks and evaluate their risk tolerance before making an informed decision. Happy investing!
(Note: The information in this article is based on the provided details and analysis as of the stated date and may be subject to change.)
