Healthy Financials and a market leader

• Medi Assist Healthcare is a key player in the insurance industry, providing crucial technological support to determine claim amounts for insured clients. The company has demonstrated impressive financial performance, with a robust compound annual growth rate of 23% and 41% in top-line and bottom-line figures over the past three years.
• Maintaining a net profit margin of 15% over the last two fiscal years and the first half of FY24 showcases the company's consistent profitability. Given the optimistic outlook for the healthcare industry and the increasing trend of people opting for medical insurance, there is a strong likelihood that the demand for Medi Assist's services will continue to rise, contributing to further financial growth.
• With a substantial 36% market share in the third party administrative, the company is a significant player in its sector. Additionally, the healthy cash balance of Rs 200 crore positions Medi Assist to explore strategic acquisitions, aiming to expand its market share further. It is noteworthy that the company currently holds negligible debt, enhancing its financial stability.
• However, a concern arises from the negative cash flow from operations reported in H1FY24, primarily attributed to higher receivables. This issue requires careful attention and management to ensure sustainable positive cash flows in the future.

Valuations

• As per FY23, the company is asking for a PE of 38x and a market cap-to-sales of 5.5x. As it is the market leader in this space and exhibits healthy financials, these valuations seem attractive and could provide good capital appreciation for investors. Hence, we recommend subscribing to this IPO.​