Narayana Hrudayalaya IPO: The healthcare major has fixed the price band between Rs 245 and Rs 250 for its IPO.
Narayana Hrudayalaya’s initial public offer (IPO) will hit primary markets on December 17. The healthcare major has fixed the price band between Rs 245 and Rs 250 for its IPO. This will be the third IPO this month from the healthcare sector after Alkem Laboratories (oversubscribed by 44.29 times) and Dr Lal Pathlabs (oversubscribed by 33.41 times) to hit markets this month.
Not more than 50 per cent of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5 per cent to the mutual funds. Additionally, not less than 15 per cent of the issue will be available for the non-institutional bidders and the remaining 35 per cent for the retail investors. The issue will close on December 21, 2015.
The shares will be listed on BSE as well as NSE. The face value of the share is Rs 10 and is priced 24.5 times of its face value on the lower side and 25.0 times on the higher side. The public offer will close on December 21.
The objective of the offer is to get the benefits of listing the equity shares on the stock exchanges and for the sale of 20,436,081 equity shares by the selling shareholders. The company also expects that the listing of the equity shares will enhance its visibility and brand image among its existing and potential clients and provide liquidity to the existing shareholders. The company will not receive any proceeds of the offer and all the proceeds will go to the selling shareholders.
The book running lead managers to the issue, Axis Capital, IDFC Securities and Jefferies India, while the Compliance Officer for the issue is Ashish Kumar.
The company has a network of 23 hospitals (multi-speciality and super-speciality healthcare facilities which provide tertiary care), 8 heart centres and 24 primary care facilities including clinics and information centres, across 31 cities, towns and villages in India. In 2014-15, the facilities provided care to over 1.97 million patients.
Revenues of Narayana Hrudayalaya grew at a CAGR of 30 per cent in FY11-15. The contribution from its top five hospitals by revenue was 67.5 per cent in FY15 compared to 80.5 per cent in FY13. The contribution from in-patient billed revenue from specialties outside of cardiac and renal sciences was 38.3 per cent in FY15 compared to 32.3 per cent in FY13.
Due to a subdued operational performance and higher financial, depreciation and taxation, the company registered a net loss of Rs 10.9 crore in the previous financial year ended March 2015. In FY13 and FY14, it reported net profit of Rs 24.80 crore and Rs 31.70 crore, respectively.
Should you invest
ICICIdirect.com in a research report said, “At the IPO price band of Rs 245-250, Narayana Hrudayalaya is available at 3.9x on EV/Sales of FY15 and EV/per Bed of Rs 97.6 lakh. Though the valuation is a tad expensive, it is in line with the recent deals in the healthcare industry. We recommend that investors can ‘Subscribe’ to the issue.
Howevever, Hem Securities in a research report said, “Though company’s business model looks attractive but looking after the financials, valuations looks expensive at current levels. Hence we recommend investors to ‘Avoid’ the issue.”
Angel Broking has a ‘Neutral’ view on the IPO from a short term perspective. However, investors with a longer term investment horizon can subscribe to the issue considering that the company’s performance is expected to be more favorable in the longer run as the hospital business entails a longer gestation period and takes time to perform at optimum levels.
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