Jupiter Life Line Hospitals IPO opens | 10 key things to know before you subscribe

2) Price Band

The offer price band has been fixed at Rs 695 to Rs 735 per share.

3) Fund Raising

The initial public offering by the company comprises a fresh issuance of shares worth Rs 542 crore, and an offer-for-sale (OFS) of 44.5 lakh shares by 10 selling shareholders including promoter group names Devang Vasantlal Gandhi (HUF), and Devang Gandhi jointly with Neeta Gandhi.

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The multi-specialty tertiary and quaternary healthcare provider is planning to raise Rs 869.08 crore via public issue at the upper price band.

The size of the fresh issue has been reduced by Rs 123 crore to Rs 542 crore after the company issued 16.73 lakh equity shares via private placement before launching the public offer, to 10 investors including SBI Magnum Children’s Benefit Fund - Investment Plan, Neuberger Berman Emerging Markets Equity Fund, Ashoka India Equity Investment Trust Plc, Think India Opportunities Master Fund LP, and DC Ikka.

The firm has already raised Rs 260.72 crore from anchor investors on September 5, a day before the issue opening. Marquee investors participated in the anchor book were Abu Dhabi Investment Authority, Government of Singapore, Goldman Sachs, Fidelity Funds, HSBC Global, Nomura Funds, SBI Mutual Fund, ICICI Prudential, HDFC Mutual Fund, HDFC Life Insurance, and SBI Life Insurance Company.

4) Objectives of Issue

The company is going to utilise net fresh issue proceeds mainly for debt reduction worth Rs 510.4 crore, and the remaining for general corporate purposes.

The total borrowings of the company and material subsidiary stood at Rs 476.4 crore as of March FY23.

General corporate purposes included funding growth opportunities, strengthening marketing capabilities, and working capital requirements.

5) Lot Size

Investors can bid for a minimum of 20 equity shares and in multiples of 20 shares thereafter. The minimum application size for retail investors comes to Rs 14,700 per lot (20 shares) and the maximum investment is Rs 1,91,100 for 260 shares as they can not exceed their investment limit of Rs 2 lakh in the IPO, while high net-worth individuals with investment limit of Rs 2 to 10 lakh can invest a minimum of Rs 2,05,800 for 280 shares and their maximum application size is Rs 9,99,600 for 1,360 shares.

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Half of the offer size is reserved for qualified institutional buyers. The remaining 15 percent is for high-networth individuals (non-institutional investors) and 35 percent for retail investors.

6) Company Profile

The firm that operators hospitals under the Jupiter brand claimed to be among the key multi-specialty tertiary and quaternary healthcare providers in the Mumbai Metropolitan Area (MMR) and western region of India with a total bed capacity of 1,194 hospital beds across three hospitals as of March 2023.

It currently operates three hospitals in Thane, Pune and Indore, with 1,306 doctors including specialists, physicians and surgeons, as of March 2023. It is also in the process of developing a multi-specialty hospital in Dombivli, Maharashtra, which is designed to accommodate over 500 beds and has commenced construction in April 2023.

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The average occupancy rate has improved in the past years to 62.61 percent at the end of March FY23, against 53.96 percent in the previous year, while average revenue per occupied bed (APROB) stood at Rs 50,990 in FY23, increasing from Rs 48,711 in FY22.

Operationally, its in-patient and out-patient volumes also remained strong, growing at a CAGR of more than 30 percent in FY21-FY23.

7) Financial Performance

Ajay Thakker, Ankit Thakker and Western Medical Solutions LLP-promoted company have turned profitable in the fiscal 2022. Profit in the year FY23 at Rs 72.9 crore increased by 42.6 percent compared to the previous year, with revenue from operations growing by 21.7 percent to Rs 892.5 crore and EBITDA (earnings before interest, tax, depreciation and amortisation) rising 31.2 percent to Rs 201.3 crore during the same period.

The EBITDA margin expanded by 163 bps on-year to 22.55 percent in the fiscal year 2023 and the net profit margin improved further to 8.07 percent from 6.94 percent during the same period.

Thane hospital contributed 54 percent to the topline in FY23 and 34 percent contribution by Pune hospital, and the remaining 11.79 percent by Indore hospital.

Return on equity and return on capital employed, too, remained strong in the past years, growing to 20.03 percent and 20.94 percent in FY23, from 17.73 percent and 16.08 percent in the previous year.

With a market capitalisation of Rs 4,819 crore at the upper price band, Jupiter Hospitals compares itself with listed entities like Apollo Hospitals Enterprise, Fortis Healthcare, Narayana Hrudayalaya, Global Health, Krishna Institute of Medical Sciences, and Max Healthcare Institute.

It is available at a P/E (price-to-earnings) of 52.7x and EV/EBITDA of 22.1x on the FY23 basis.

8) Promoters and Management

Promoters currently hold 49.79 percent shareholding in Jupiter Hospital and the rest is held by public shareholders including JM Financial and Persepolis Investment Company.

Ajay Thakker is the Chairman and Managing Director on the board, while Ankit Thakker is the Executive Director and Chief Executive Officer of the company.

Vadapatra Raghavan is the Non-Executive Director, while Darshan Vora, Jasmin Patel, Satish Utekar, and Urmi Popat are the independent directors.

In addition, Suma Upparatti is the Company Secretary and Compliance Officer of the company, while Harshad Purani is the Chief Financial Officer as well as the president – administration and head of corporate social responsibility.

9) Risk Factors

a) Its revenues are significantly dependent on the hospital in Thane. Further, all hospitals are located in the western regions of India. Any impact on the revenues of Thane hospital or any change in the economic or political circumstances of Western India or particularly in or around Thane, could materially affect the business.

b) It is highly dependent on the healthcare professionals including doctors and nurses, and any future inability to attract/ retain such professionals will adversely affect the business.

c) The healthcare industry is highly regulated and requires Jupiter Hospital to obtain, renew and maintain statutory and regulatory permits, accreditations, and licenses and comply with applicable safety, health, environmental, labour and other governmental regulations.

d) It incurs high expenses in relation to medical equipment cost, manpower cost, infrastructure maintenance and repair costs, ancillary items and pharmaceuticals. If Jupiter is unable to obtain favourable pricing from suppliers or negotiate compensation for our healthcare professionals effectively, it could affect profitability.

10) Listing Date

Jupiter Hospital will finalise the basis of the allotment of IPO shares by September 13 and the equity shares will be credited to the demat accounts of eligible investors by September 15. The refunds will be credited to bank accounts of unsuccessful investors by September 14.

Its equity shares will debut on the BSE and NSE on September 18, as per the IPO schedule.

IPO shares were available at a premium of 29 percent in the grey market, over the upper price band of Rs 735 per share, analysts said on anonymity. Generally, the grey market, an unofficial platform for trading in IPO shares till the listing, is considered by investors to check the possible listing price.

ICICI Securities, Nuvama Wealth Management, and JM Financial are the book-running lead managers to the issue. KFin Technologies is the registrar.