Business Overview:
Established in 1989, GPT Healthcare Limited manages ILS Hospitals, a chain of mid-sized, full-service hospitals in Eastern India. Headquartered in Kolkata, it operates four hospitals – Salt Lake, Agartala, Dum Dum, and Howrah, totaling 561 beds as of Sept 30, 2023.
Specializing in 35+ medical disciplines, the company provides integrated healthcare, diagnostic services, and pharmacies. With 1,902 employees, 91 full-time consultants, and 481 visiting consultants, it focuses on secondary and tertiary care offering a comprehensive range of services including internal medicine, surgery, obstetrics, cardiology, neurology, and more.
IPO Synopsis:
IPO Date | 22nd Feb to 26th Feb 2024 |
Face Value | Rs. 10/- per share |
Price Band | Rs. 177 to Rs. 186 per share |
Lot Size | 80 shares and in multiples thereof |
Issue Size | Rs. 525 crores |
Fresh Issue | Rs. 40 crores |
OFS | Rs. 485 crores |
Objects of the Issue:
- Repayment/prepayment, in full or part, of certain borrowings availed of by the Company (Rs. 30 crores).
- Balance for general corporate purposes.
Risks:
- Geographical concentration: All their hospitals are located in the eastern regions, any adverse political or natural developments affecting these regions would significantly impact the business of the company.
- The Lower Bed Occupancy Rate than its listed peers exposes the company’s inefficiency to operate optimally.
- Outstanding Litigations on company, promoters, and directors amount to Rs. 29.3 crs if materialized this could adversely affect the business and cash flows of the entity.
Strengths:
- Operating on leasehold lands (Salt Lake hospital – 999 years, Agartala hospital – 99 years, etc) because of which the overall capex cost and high rental costs are avoided thus improving the financials.
- Well-diversified specialty mix. Offering a comprehensive range of healthcare services over and above 35 specialties and super specialties has resulted in diversified revenue streams.
- Ability to attract, train, and retain quality medical professionals. As of 30/09/2023 - 91 full-time consultants, 481 visiting consultants, and 740 nurses are associated with the entity.
Financial Snapshot (Rs. In Crores):
Particulars | FY23 | FY22 | FY21 |
Revenue from Operations | 361 | 337 | 243 |
YoY Growth | 7% | 39% | |
EBITDA | 80 | 79 | 55 |
YoY Growth | 1.3% | 43.6% |
|
EBITDA Margin | 22% | 23% | 22% |
PAT | 39 | 42 | 21 |
PAT Margin | 10.6% | 12.1% | 8.5% |
RoCE | 26% | 25% | 14.5% |
RoE | 23.6% | 26.3% | 15.7% |
Revenue from operations during the period ending 30th Sept 2023 is Rs. 204 crs which grew at 18.73% YoY, EBITDA – Rs. 46 crs, PAT- Rs. 24 crs, EBITDA & PAT Margins stood at 22.3% and 11.4%.
ALOS: 3.98 days
ARPOB: Rs. 32,979
Bed Occupancy Rate: 59.92%
Conclusion:
The Indian healthcare industry is estimated to grow at 9-11% CAGR between fiscals 2024 and 2028, driven by long-term structural factors, strong fundamentals, increasing affordability, and the potential of the Ayushman Bharat scheme.
Due to this, the demand for hospitals is only going to rise.
Since the company is operating at a smaller scale and has only 4 branches the growth would soon hit a ceiling. Therefore, to grow, the company needs to have a continuous outflow for capex due to which there would be constant pressure on its bottom line despite the company's continuous efforts of working on leased properties.
Considering key indicators like the Bed Occupancy rate (59.92%%) and ARPOB (Rs. Rs. 32,979) the level of operations, financials, and business outlook - earnings valuation of 38 times seems to be fairly priced when compared to its listed peers.
Due to the exiting of existing shareholders and the availability of better-listed players, we would like to suggest our investors to “avoid” this IPO.
Post listing investors can re-look into the company’s performance and take a call.
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