Yatharth Hospital IPO subscribed 2.1 times on Day 2 of bidding
The initial public offering (IPO) of Yatharth Hospital and Trauma Care Services continued to get a good response from investors on July 27, the second day of bidding, as well, with the offer subscribed 2.1 times.By noon, bids had come in for 3.46 crore equity shares against the IPO size of 1.65 crore shares.High networth individuals (HNIs) and retail investors have bought 3.59 times and 2.49 times their allotted quotas, while qualified institutional buyers (QIBs) bid for 26 percent of the shares set aside for them.The Noida-based hospital chain is looking to raise Rs 686.55 crore through the IPO, which comprises a fresh issue of shares worth Rs 490 crore and an offer for sale of Rs 196.55 crore by promoters.The proceeds from the fresh issue will be used largely for paying debt, capital expenditure and inorganic growth initiatives, the company said.Yatharth Hospital mopped up Rs 206 crore through the anchor book on July 25. ICICI Prudential, Goldman Sachs, HDFC Mutual Fund, Max Life Insurance, Aditya Birla Sun Life Trustee, SBI Life Insurance, HSBC Global Investment Funds, Carnelian Capital, Troo Capital, and BNP Paribas Arbitrage were among the investors.The price band for the offer has been fixed at Rs 285-300 a share.Among the leading super specialty hospitals in the Delhi-NCR region, Yatharth Hospital says it has advanced and high-end medical equipment and technology.The company’s collaborations with leading institutions and experts would improve its diagnostic and treatment capabilities and expansion in other areas will drive growth, Asit C Mehta Investment said.The brokerage has recommended subscribing to the issue from a long-term perspective.At the upper price band of Rs 300 a share, the stock is priced at 29.73 of its FY23 EPS of 10.09, which is lower compared to its peers.Yatharth’s number of occupied beds and average revenue per occupied bed (ARPOB) grew at 13 percent and 12 percent CAGR during FY21-23, leading to a 51 percent CAGR growth in revenue. EBITDA grew at a CAGR of 41 percent during the period.Also read: Netweb Tech off to a flying start, what should investors do?”India’s current healthcare expenditure is largely dominated by private expenditure. North India regions including Haryana and Uttar Pradesh have lower than average doctor and nurse density per 10,000 population. This is expected to improve going ahead, favouring company’s expansion plans,” Nirmal Bang said.The company intends to focus on more advanced specialties, with high demand and deliver a higher ARPOB. With high ROE and ROCE of 36 percent and 24.4 percent, the brokerage said Yatharth is being offered at a reasonable valuation of 20.9x FY23 EV/EBITDA as compared to its peers.With healthy financials along with growth potentials in northern India, Nirmal Bang recommends subscribing to the issue.
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