Shalby IPO to open on December 5; 10 things you should know before investing

Equity shares are proposed to be listed on BSE and NSE. The book running lead managers to the offer are Edelweiss Financial Services, IDFC Bank and IIFL Holdings.

Here are 10 things you should know before investing:-

About the Offer

The public offer comprises a fresh issue of equity shares aggregating up to Rs 480 crore and an offer for sale of up to 10,00,000 equity shares by Dr Vikram Shah.

The offer comprises a reservation of up to 1,21,000 shares for subscription by eligible employees.

Bids can be made for a minimum lot of 60 equity shares and in multiples of 60 equity shares thereafter.

Objects of the Issue

The fresh issue proceeds would be used for repayment certain loans (Rs 300 crore); purchase of medical equipments (Rs 63.58 crore); purchase of interiors, furniture, and allied infrastructure for upcoming hospitals (Rs 11.18 crore); and general corporate purposes.

The company will not receive any proceeds from the offer for sale.

Company Profile

Led by Dr Vikram Shah, an orthopaedic surgeon with more than 25 years of professional experience, Shalby is one of the leading multi-specialty chain of hospitals in India (Source: F&S Report).

As on November 24, the company provides inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate bed capacity of 2,012 beds. It also provides outpatient services through 47 outpatient clinics and has ten shared surgery centres within third party hospitals, called Shalby Arthroplasty Centre of Excellence.

The company had a 15 percent market share of all joint replacement surgeries conducted by private corporate hospitals in India in 2016 (Source: F&S Report).

The company has a domestic and overseas outreach through a network of hospitals in India, and outpatient clinics and SACE located in India, Africa, and the Middle East. Having strong presence in western and central India and focus on Tier – I and Tier – II cities, its hospitals operate across five states, its outpatient clinics operate across 37 cities in 12 states in India, and its SACE are present in seven cities in six states in India. Its international footprint consists of five Outpatient Clinics and one SACE in Africa, and two SACE in the UAE.

Strengths

> Leadership in orthopaedics and strong capabilities in other specialties;

> Integrated and scalable business model enable company to provide comprehensive healthcare solutions through a network of multi-specialty hospitals, outpatient clinics, and SACE;

> Company has an established presence and strong brand recall in Gujarat, and an emerging presence in western and central India;

> Track record of consistent growth in revenue and profitability;

> Ability to attract quality doctors, nurses, paramedical, and other staff;

> Experienced and qualified professional management team with strong execution track record.

Financials

Promoter

Promoters of the company are Dr Vikram Shah, Dr Darshini Shah, Shanay Shah, Shah Family Trust, and Zodiac.

Dr Vikram Shah, the chairman and managing director, holds a bachelors’ degree in medicine and surgery, and a masters’ degree in orthopaedic surgery, and has over 25 years of experience in the medical industry.

Dr Darshini Shah, a non-executive, non-independent director, holds a bachelors’ degree in dental surgery and has over 21 years of experience in the medical industry.

Shanay Shah, the director (international business), holds a bachelors’ degree in science with honours in accounting and finance and a masters’ degree in international health management, and has an experience of three years in the healthcare industry.

As of November 24, 2017, promoters, together hold 8,67,58,098 equity shares (representing 97.86 percent of the pre-offer paid-up capital), which would be reduced to 79.4 percent post issue.

The above shareholding includes 4,33,27,132 equity shares (constituting 48.87 percent of pre-offer paid-up capital), held by Shah Family Trust, acting through its trustees Dr Vikram Shah and Dr Darshini Shah.

Shareholding

Top 10 shareholders as of November 24, 2017 are as follows:

Management

Comparison with Listed Industry Peers

Risks and Concerns

Here are some risks and concerns highlighted by brokerage houses:-

> High proportion of revenue generated from two hospitals SG Shalby and Krishna Shalby

> High dependence on one field of specialty i.e. orthopaedics for a substantial portion of revenue

> Reliance on third party suppliers and manufacturers for its equipment, reagents and drugs

> Change in government policies that relate to patients covered by government schemes

> Increasing competitions from other hospitals and healthcare facilities

> Business is characterised by periodic technological changes

Image Source: RHP