Global Health IPO opens tomorrow: 10 key things to know

2.  Price band

It has been fixed between Rs 319 and Rs 336 per equity share of face value Rs 2 each.

3.         Offer details

Founded by cardiologist Naresh Trehan, the company is planning to raise about Rs 2,119 crore- 2,206 crore through this issue. It includes a fresh issue of Rs 500 crore, comprising 1.49-1.57 crore shares and an offer for sale (OFS) of Rs 1,169 – Rs 1,706 crore, comprising 5.08 crore equity shares by promoters and shareholders.

The OFS by selling shareholders includes the sale of 5.07 crore shares by Anant Investments and 1 lakh equity shares by Sunil Sachdeva and Suman Sachdeva. The company will not get any proceeds from the OFS portion. Those proceeds will entirely go to the promoters.

Post the issue, the promoter shareholding will fall to 33 percent from the current 35 percent.

Of the total offer size, 75 percent of the net offer will be reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional investors and the remaining 10 percent for retail investors.

4.         Objectives of the issue

Of the net proceeds from the fresh issue, Rs 375 crore will be invested in the company’s subsidiaries. They, in turn, will utilise the fund for prepayment/repayment of debt. Residual funds will be used for general corporate purposes.

5.    Lot size

Investors can bid for a minimum lot size of 44 shares and in multiples thereof. The minimum investment for a retail investor works out to Rs 14,784 at the upper end of the price band for 44 shares. A retail investor can apply for up to 13 lots, or 572 shares, for Rs 1,92,192.

6.         Company profile & industry

The company is engaged in the segments of cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopaedics, liver transplant and kidney and urology.

Among the players operating in north and east India, Global Health is one of the largest private multi-specialty tertiary care providers in terms of bed capacity and operating revenues in FY22. With nine specialties, the company has diversified revenue streams.

Under the Medanta brand, Global Health has a network of five hospitals (Gurugram, Indore, Ranchi, Lucknow and Patna), and an expansive area of 4.7 million sq ft. It has an installed operating capacity of 2,467 beds (as of June 30, 2022). Relative to the overall bed strength, it has a higher proportion of operation theatres (69), procedure rooms and ICUs (523 beds).

A hospital at Noida, with a projected capacity of 300 beds, is under construction. It is likely to commence operations in FY25. Apart from the Noida facility, bed capacities at the existing hospitals are also likely to be increased, so as to have a total installed capacity of 3,500 beds by the end of FY25.

According to industry reports, in FY17-22, the Indian healthcare delivery market is estimated to have grown at a CAGR of 10-12 percent to reach a size of around Rs 5 lakh crore.

Further, with strong sector macros like lower hospital bed density with respect to the population, lower expenditure on healthcare infrastructure as compared to developed and several developing countries, rising income levels and increasing affordability for healthcare services and improving potential of the Ayushman Bharat scheme, the healthcare delivery market is estimated to grow at a CAGR of 13-14 percent over FY22-26 to reach Rs 8.3 lakh crore.

7.    Financials

During the financial year ending March 2020, the company generated revenues to the tune of Rs 1,480 crore. Revenues in FY21 came in at Rs 1,418 crore while the company reported revenue of Rs 2,166 crore during FY22. During the three-month period ending June 2022, its revenues stood at Rs 596 crore. During the same period last year, revenues were Rs 472 crore.

Revenues have grown at a CAGR of 20 percent over FY20-22, led by an eight percent CAGR in bed capacity. Occupancies improved to 60 percent and average revenue per operating bed (ARPOB) grew by 4 percent over the same period.

The EBITDA margins have improved consistently over the last two years, led by a consistent improvement in the margins of mature hospitals (~85 percent of revenues), which stood at 22.8 percent in FY22. The EBITDA margins of new hospitals (contributing 15 percent to revenues) improved to 20 percent.

EBITDA grew at CAGR of 55 percent over FY2020-22 to Rs 451 crore. PAT grew by 5.3x to Rs 196 crore over the same period. RoCE consistently improved to 13.8 percent in FY22 from ~5 percent in FY20.

8.    Strengths and concerns

Global Health is recognised for clinical expertise, especially in dealing with complicated cases, and it focuses on clinical research and academics. It works on the principle of ‘doctor-led’ hospitals which are driven by skilled and experienced doctors in the healthcare space.

It has large-scale hospitals with sophisticated infrastructure, medical equipment and technology and focuses on under-served areas with a dense population. At the same time, it is present in the top or capital cities of large states (NCR, Lucknow and Patna). The company has immense growth opportunities in existing facilities through diversification into new services, including digital health.

Global Health is highly dependent on doctors, nurses and other healthcare professionals and whether it will be able to attract / retain skilled professionals is a concern. The other concerns include lower hospital bed occupancy rate, difficulty in reviving loss-making subsidiaries and continued subdued business through medical tourism.

9.    Key management personnel

Naresh Trehan, Chairman and Managing Director, has been on the Board since incorporation. He is the promoter and has also been appointed as Chairman - Heart Institute & Chief Cardiac Surgeon for five years from August 1, 2021.

Sunil Sachdeva is a non-executive director and was appointed to the Board on August 13, 2004.

Pankaj Prakash Sahni is the CEO and has been associated with the company since December 1, 2010.

Sanjeev Kumar is the CFO. He has been associated with the company since 2018.

10.     Grey Market, allotment & listing dates

The company’s shares are commanding a premium of Rs 25 per share in the grey market currently, according to IPO Watch and IPO Central, both of which track the grey market movements.

Shares will be allotted to successful bidders on November 11, and the refund to unsuccessful bidders will be credited on November 14. Shares will be credited to the demat account of the successful bidders by November 15 and the stock will debut on the bourses on November 16.