Investors are advised to hold the multi-specialty hospital chain Krishna Institute of Medical Sciences (KIMS Hospitals) given the increasing focus on the healthcare sector after the COVID-19 pandemic scenario globally, while investors should start booking profits in Dodla Dairy given the general underperformance of this sector, in the long run, experts feel.
KIMS Hospitals shares fell more than 5 percent to hit day's low of Rs 955 after opening at Rs 1,008.90 on BSE on June 28. Meanwhile, Dodla Dairy's shares jumped 20 percent to hit their 20 percent upper circuit at Rs 633.60 on the BSE.
KIMS operates as one of the largest corporate healthcare groups in Andhra Pradesh and Telangana in terms of the number of patients treated and treatments offered. It has 9 multi-specialty hospitals under the 'KIMS Hospitals' brand, with an aggregate bed capacity of 3,064 including over 2,500 operational beds as of March 31, 2021.
"KIMS might turn out to be a darkhorse in the long run as the company's performance has been robust with return on equity (ROE) and return on capital employed (ROCE) above 20 percent. It has a presence in Tier I, II and III cities across South India. One can consider holding this issue for medium to long term," said Gaurav Garg, Head of Research at CapitalVia Global Research.
Prashanth Tapse, VP Research at Mehta Equities also advised allotted investors to hold on to the stock considering the long-term play as the market is rewarding for the health care segment following the global pandemic scenario.
The healthcare sector reported more than 50 percent gains in the last one year amid increased focus on health following the global COVID-19 pandemic scenario.
Apollo Hospitals Enterprises itself rallied 139 percent in the last one year, Fortis Healthcare 94 percent, Narayana Hrudayalaya 77 percent, and Indraprastha Medical Corporation up 51 percent.
According to Yash Gupta Equity Research Associate at Angel Broking, long-term investors can partially book profit and hold the remaining quantity for the long term. "Investors who don't receive the allotment can wait for some price correction and then buy the stock for the long term," he said.
He further said based on FY21PE of 31.2x and EV/EBITDA of 17.8 times at the upper band of the IPO price, valuations were attractive as compared to Narayan Hrudayalaya, Fortis Hospitals and Max Hospitals, etc.
"Additionally, the company has reported a good set of numbers for FY2021 which are better than all the peers in the hospital sector. If we compare KIMS with other peers on returns ratio, then KIMS has one of the best Return of equity (ROE) & Return on capital employed (ROCE) of 23.8 percent and 24.8 percent respectively," he added.
KIMS Hospitals raised Rs 2,144 crore from investors during June 16-18. The fresh issue proceeds will be utilised for repaying of debts, and general corporate purposes.
Hyderabad-based integrated dairy company Dodla Diary is engaged in the procurement, processing, distribution and marketing of milk and other dairy products. The company primarily derives all of its revenue from the sale of milk (around 75 percent of 9MFY21 revenue) and dairy-based VAPs (value-added products) in the branded consumer market.
It has a significant presence in the southern region of India, with operations primarily across the five Indian states of Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Maharashtra. The overseas operations are based in Uganda and Kenya.
"Dairy stocks have not rewarded the investors much or have not exhibited extraordinary results in the long run. Compared to the recent listed IPOs, this stock might lag in one's portfolio over the long run. Therefore, investors are advised to book their listing gains," Gaurav Garg said.
Prashanth Tapse also recommended allotted investors to book profits on listing day. "If non-allotted investors wish to buy on a listing day, it is better to wait and watch to accumulate at better pricing range going forward," he said.
Dodla Dairy enjoys a significant market presence (second highest) in the southern region of India amongst other private diary players all over India. It has 13 processing plants with an aggregate installed capacity of 1.70 million litres of raw milk per day (MLPD).
It intends to increase its revenue from diary-based value-added products (VAPs) (which yield a higher margin) to optimize its product portfolio going ahead. Its revenue during FY18-FY20 grew at a CAGR of 16 percent and EBITDA at a CAGR of 12 percent.
Dodla Dairy has garnered Rs 520.17 crore through its public issue during June 16-18, 2021 which included a fresh issue of Rs 50 crore. The fresh issue proceeds will be utilised for repaying debts, working capital requirements and general corporate purposes.
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