Medanta to debut today | Will it make investors happy?

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26 Aug, 2025 12:21

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Global Health, the operator of the Medanta chain of hospitals, is unlikely to make investors happy when it debuts on the stock exchanges on November 16 as experts expect the shares to be little changed or gain only moderately at the opening despite a healthy equity market environment.

The lower-than-expected subscription numbers during the initial public offering, a major portion of which was an offer for sale by existing investors, and the muted response in categories other than qualified institutional buyers are expected to result in moderate gains on listing.

The grey market did not indicate a bumper listing, either. Medanta shares traded at a 5-7 percent premium in the grey market, analysts said. Investors generally look at the grey market, an unofficial trading platform for IPO shares, to get a hint of the expected price of shares making their debut after an IPO.

“A mute listing will be expected because there was not much for the investor on the table in terms of valuation, less than standard subscription numbers, and the nature of the major proportion in this issue being an offer for sale. The current grey market premium is around 6 percent above its issue price,” said Parth Nyati, founder of Tradingo.

Global Health is one of the largest private multi-specialty tertiary care providers operating in north and east India under the brand Medanta.

“The issuer has good patient volumes and cost efficiency and its financial profile also shows an increasing trend. Nevertheless, the promoter shareholding would come down to 33 percent post-IPO. Finally, the issue is fairly priced at a P/E of 43 as compared to the average industry P/E of 51.93,” said Nyati, who had assigned the Medanta IPO only for long-term investors.

The Global Health IPO was subscribed 9.58 times during November 3-7. Retail investors bid for 88 percent shares of the allotted quota, and non-institutional investors bought 4.02 times the portion set aside for them, while QIBs were aggressive, buying 28.64 times the reserved portion.

Generally, investments by QIBs are for the long term.

“Backed by a supportive secondary market and optimistic industry outlook, the Global Health offer managed to bring in the long-term investor’s interest for subscribing to the IPO, which can be seen in the QIB subscription,” said Prashanth Tapse, senior VP for research at Mehta Equities.

Considering the decent response from other categories of investors and the positive market mood, he expects a flat to moderate 5-10 percent gain on listing in a best-case scenario.

Mohit Nigam, fund manager and head of PMS at Hem Securities, expects Medanta shares to list on a flat to positive note.

Global Health recorded a 50 percent growth in revenue from operations in FY22 and 27 percent growth in the first quarter of FY23 from a year ago, led by an increase in patient volumes, bed occupancy and higher average revenue per occupied bed.

Consolidated profit grew almost sevenfold to Rs 196.2 crore in FY22 and 40 percent to Rs 58.7 crore in Q1 of FY23.

On the operating front, its EBITDA (earnings before interest, tax, depreciation and amortisation) grew at around 55 percent CAGR during FY20-FY22, and margin expanded to 21 percent in FY22, from 12 percent in FY20, aided by better operational efficiencies.

The Global Health IPO of Rs 2,205 crore included a fresh issue of only Rs 500 crore, while the rest was an offer for sale by existing investors.