About the company:
Global Health Limited
About the Company
Global Health is one of the largest private multi-speciality
tertiary care providers operating in the North and East regions of India. It
offers services in key specialities of cardiology and cardiac science, neurosciences,
oncology, digestive and hepatobiliary sciences, orthopaedics, liver transplant,
and kidney and urology.
They operate under the brand name “Medanta” and have a
network of five hospitals currently in operation. Along with this, one hospital
is under construction. The hospital was founded by Dr Naresh Trehan, a
world-renowned cardiovascular and cardiothoracic surgeon.
Objects of the
Offer
Offer for Sale: ~Rs. 1,705. 57 crores
Proceeds of the Fresh Issue Rs. 500 crores
·
Investment in 2 of their subsidiaries for repayment/prepayment
of borrowings of the subsidiaries: Rs 375 crores
·
General corporate purposes: Remaining amount
Strengths
Facilities
Offered: Large-scale hospitals with sophisticated infrastructure,
medical equipment and technology. It was designed to comply with JCI
requirements and offers all major medical specialities under one roof.
Operational
Efficiency: The hospitals are large and accommodate more patients.
Its Gurugram hospital has 40 operating rooms, and an installed bed capacity of
1,391 including 285 ICU beds, as of June 30, 2022. They have grown to hospitals
with 2,467 installed beds across five cities as of June 30, 2022.
Market Foothold: The Company
operates in underpenetrated markets of North and East. Their world-class
services enable customers to come to them for all complex treatments.
Strong
Team: Dr Trehan is the driving force behind the Medanta
brand. They have successfully recruited skilled and experienced healthcare professionals.
As of June 30, 2022, the team comprised more than 6,000 medical professionals,
including over 1,300 doctors and over 3,700 nurses and over 1,000 paramedical
personnel.
Sturdy
Financials: Medanta was able to achieve revenue of over Rs. 50 crores
in nine specialities indicating the diversified revenue streams across multiple
specialities in Fiscals 2020, 2021 and 2022. The Average Revenue per Occupied
Bed (ARPOB) for mature hospitals was Rs. 50,302.80, Rs. 47,682.69, and Rs.
54,272.99 for FY20, FY21 and FY22, respectively.
Financial
Snapshot
|
Particulars (In Rs. Crores)
|
FY2020
|
FY2021
|
FY2022
|
Q1FY22
|
Q1FY23
|
|
Average revenue
per occupied bed (ARPOB)
|
50,166
|
47,731
|
54,547
|
49,124
|
58,961
|
|
Total Income
|
1,544
|
1,478
|
2,205
|
491
|
627
|
|
EBITDA
|
230
|
222
|
489
|
105
|
141
|
|
Average
occupancy (%)
|
54.85%
|
51.57%
|
60.50%
|
62.58%
|
59.57%
|
|
Average number
of days that patients spent in hospital
|
3.52 days
|
3.89 days
|
3.76 days
|
4.65 days
|
3.22 days
|
Risks
·
Geographical concentration risk persists for the
company as it has all its hospitals operating in North and East India.
·
The hospital business may see a fall in its
revenue due to increased competition faced in the sector. Declining footfall
and increased costs will adversely affect the profitability of Medanta.
·
One key resource for hospitals is the medical
staff. The hospital will suffer a setback if the company is unable to retain
experienced doctors and nurses.
Conclusion
The company has demonstrated that the management can grow
the business without sacrificing quality. Global Health has a strong brand
image in North India and is now opening a hospital in Noida. In the short term,
the additional capital expenditures may reduce operating profit margins.
Despite facing stiff competition, Medanta's long-term
prospects look promising, especially given its infrastructure and services. The
company is also reasonably priced in terms of valuation. Taking these factors
into consideration, we advise investors to 'SUBSCRIBE FOR LONG TERM.'
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