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Global Health IPO review & analysis

Global Health Limited IPO details & review

Global Health Limited IPO

About the company

Global Health Limited is one of the major private multi-specialty tertiary care providers in India’s North and East. Cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopedics, liver transplant, and kidney and urology are among the company’s major specialties.

Global Health Limited now operates four hospitals under the “Medanta” name (Gurugram, Indore, Ranchi, and Lucknow). The Medanta Institutional Tissue Repository was created in 2017 to encourage biomarker and other tissue-based research.

Global Health IPO Details

 

IPO Date Nov 3, 2022 to Nov 7, 2022
Listing Date [.]
Face Value ₹2 per share
Price ₹319 to ₹336 per share
Lot Size 44 Shares
Issue Size [.] shares of ₹2
(aggregating up to ₹2,205.57 Cr)
Fresh Issue [.] shares of ₹2
(aggregating up to ₹500.00 Cr)
Offer for Sale 50,761,000 shares of ₹2
(aggregating up to ₹1,705.57 Cr)
Issue Type Book Built Issue IPO
Listing At BSE, NSE
QIB Shares Offered Not more than 50% of the Offer
NII (HNI) Shares Offered Not less than 15% of the Offer
Retail Shares Offered Not less than 35% of the Offer
Company Promoters Dr. Naresh Trehan is the company promoter.

 

The IPO of Global Health Limited, a company that operates and manages hospitals under the Medanta brand, is scheduled to open for subscription on November 3. According to the Red Herring Prospectus (RHP), investors can invest in this IPO till November 7. According to merchant banking sources, the size of the IPO could be around Rs 2,200 crore. Under the IPO, fresh equity shares of Rs 500 crore will be issued. In addition, 5.08 crore equity shares will be sold by the promoters of the company under offer-for-sale (OFS).

As a part of the OFS, Anant Investments, private equity major Carlyle Group and Sunil Sachdeva (jointly with Suman Sachdeva) will sell the shares. At present, Anant Investments holds a 25.64 percent stake in Global Health and Sachdeva holds 13.41 percent in the company. The funds received under this IPO will be used for the repayment of loans and for general corporate purposes.

Objective

The net proceeds of the new issuance will be used to repay debt, finance capital expenditure, fund the future acquisition of subsidiary Bio needs India, fund working capital requirements, and for general corporate purposes.

Competitive Strengths

  1. Global Health Limited is the country’s major provider of tertiary and quaternary health care. They also have clinical skill in addressing crucial cases that is well-known.
  2. Global Health Limited has world-class facilities with cutting-edge infrastructure, medical equipment, and technology based on the most recent breakthroughs.
  3. India’s leading tertiary and quaternary care provider, renowned for clinical skill, particularly in dealing with complex cases.
  4. Concentrate on clinical research and academia.
  5. Large-scale hospitals with world-class infrastructure, cutting-edge medical technology, and medical equipment.
  6. Proven track record of excellent operational and financial success.
  7. Concentrate on underserved areas with dense populations, as well as the presence in major or capital cities of big states (NCR, Lucknow and Patna).
  8. Opportunities for expansion in current facilities and diversification into new services, such as digital health.
  9. Skilled senior management with significant institutional shareholder backing.

Risks

  1. The firm’s revenue is concentrated in the country’s north and east, and any substantial change in geographic or economic conditions at these rates would have a direct impact on the company.
  2. The firm is also vulnerable to the inherent risks of being in the healthcare industry, as well as any legal threats.
  3. The company’s total income, earnings per share (“EPS”), net asset value (“NAV”), return on net worth (“RoNW”), net profit margin, and return on capital employed (“RoCE”) may be lower than those of some of the listed comparable industry peers, as may its price-to-earnings (“P/E”) ratio, enterprise value (“EV”) to EBITDA ratio, and market capitalization to total income ratio.
  4. Its subsidiaries, MHPL and GHPPL, have suffered losses in the previous fiscal years.
  5. Currently operates just five hospitals and six multispecialty clinics, which account for nearly all of its income. Inability to attract/retain physicians, nurses, and other healthcare personnel.

Global Health Financials

Over the fiscal years 2017-22, the Indian healthcare delivery industry is expected to develop at a 10-12% CAGR to a value of roughly Rs. 5 lakh crore. Furthermore, with strong sector macros such as lower hospital bed density in relation to population, lower expenditure on healthcare infrastructure as compared to developed and several developing countries, rising income levels & increasing affordability for healthcare services, and the government’s Ayushman Bharat scheme, the healthcare delivery market is expected to grow at a 13-14% CAGR over FY22-26E to reach Rs. 8.3 lakh cr.

Outlook & Valuation

With long-term structural factors supporting growth, renewed impetus from PMJAY, and the government’s focus shifting onto the healthcare sector, the healthcare delivery market is expected to grow at 13–15%. GHL is one of the largest private multi-specialty tertiary care providers operating in the North and East regions of India and operating under the most popular healthcare brand Medanta. It has generated strong revenue growth in the last 3 years, with a minor setback in FY21. Coming to the offer, the major proportion in this issue is the offer for sale, which could be a limiting factor in this issue. The promoter shareholding would come down to 33% post-IPO, which is another concern; nevertheless, the issuer has good patient volumes and cost efficiency, and its financial profile also shows an increasing trend. Finally, the issue is fairly priced at a P/E of 43 as compared to the average industry P/E of 51.93. Thus, we recommend a Subscribe rating for the long term.

GMP

According to IPO Watch, the grey market premium (GMP) for the Global Health IPO is now rs 25 per share. This suggests that the stock will most likely be offered at 361, a 7.44% premium to the IPO price.

Listing Date

The company’s shares will be distributed to winning bidders on November 11, and refunds will be issued on November 14. Shares will be credited to the successful bidders’ Demat accounts by 15 November, and the stock will begin trading on the stock markets on 16 November.

 

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