Yatharth Hospital lists at 2% premium to issue price

The company recorded revenue growth at a CAGR of 51 percent during FY21-FY23

Yatharth Hospital & Trauma Care Services made its debut on the bourses at a mere 2 percent premium over its issue price on August 7. Analysts had expected the stock to list at a 20 percent premium, which was marred by subdued sentiment in broader market.

The stock started trading on BSE at Rs 304 and on NSE at Rs 306, against issue price of Rs 300. The hospital chain's position as a prominent super specialty provider in Delhi NCR, diverse specialties and consistent operational and financial growth, were some of the factors behind the positive listing, said analysts.

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The Rs 687-crore public issue was subscribed 36.16 times during July 26-28. Qualified institutional investors bought 85.10 times the allotted quota, followed by high networth individuals and retail investors who had bid 37.22 times and 8.34 times the portions set aside for them, respectively.

The public issue comprised a fresh issue of Rs 490 crore and an offer for sale of Rs 196.55 crore by promoters.

Noida-based Yatharth Hospital operates three super-speciality hospitals in Delhi NCR, and one multi-specialty hospital in Madhya Pradesh with 1,405 beds capacity.

The company recorded revenue growth at a CAGR of 51 percent during FY21-FY23 driven by rise in-patient volumes, bed occupancy levels and average revenue per occupied bed. The PAT margin increased from 8.57 percent to 12.64 percent and its return on equity improved from 25.06 percent to 35.95 percent during the same period.

Yatharth Hospital's current debt-to equity ratio is at 1.5x in FY23. Post IPO, by repaying Rs 245 crore, the debt–equity ratio will be reduced to 0.03x.

With high ROE (36 percent) and ROCE (24.4 percent), analysts at Nirmal Bang had said that Yatharth was offered at a reasonable valuation of 20.9x FY23 EV/EBITDA as compared to its peers.

CRISIL estimates the Indian healthcare delivery industry to post a healthy 11.3 percent CAGR between FY23-27, driven by long-term structural factors, increasing affordability and the potential of the Ayushman Bharat scheme. This is a key tailwaind for Yatharth Hospital, said analysts.

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