Yatharth Hospital IPO Oversubscribed 4.19 Times, Closes Today
Yatharth Hospital IPO ended well, with investors expressing a great deal of interest on the last day of bidding, July 28. Applications for a total of 6.92 crore equity shares were submitted to the corporation, exceeding the 1.65 crore share offer size by 4.19 times.
High-net-worth people (non-institutional investors) outbid the reserved part by an astonishing 9.10 times, while retail investors enthusiastically outbid the permitted quota by 4.27 times.
A 0.29 percent subscription was made for the share reserved for eligible institutional purchasers. It is important to remember that qualified institutional purchasers had a 50% reserve in the public offering, including the anchor book that collected Rs 206 crore on July 25, the day before the IPO opened.
Allocation and Utilization of Funds:
The Noida-based hospital chain aims to raise Rs 686.55 crore through its maiden public issue, setting the price band at Rs 285-300 per share. The IPO consists of a fresh issue of Rs 490 crore and an offer for sale of Rs 196.55 crore by the promoters.
Yatharth Hospital plans to utilize the funds from the fresh issue for several purposes, including debt repayment, capital expenditure for hospitals, and pursuing inorganic growth initiatives.
Analyst Predictions:
Industry experts are optimistic about the future of the Indian healthcare delivery sector. CRISIL estimates a robust 11.3 percent Compound Annual Growth Rate (CAGR) for the industry in FY23-27, driven by factors such as increasing affordability, the potential of the Ayushman Bharat scheme, and long-term structural developments.
BP Equities, in particular, believes that Yatharth Healthcare and Trauma Care Services will benefit from the growth in healthcare infrastructure and the rising penetration of medical insurance over the long term.
Financial Performance:
Over the period of FY21-23, Yatharth Hospital has demonstrated steady growth in both its top and bottom lines. The Profit After Tax (PAT) margin increased from 8.57 percent to 12.64 percent, while the Return on Equity (ROE) improved from 25.06 percent to 35.95 percent.
The company’s plan to retire debt using the IPO proceeds is expected to enhance its profitability in the future, according to BP Equities, which recommends subscribing to the issue.
However, it’s worth considering that the debt-to-equity ratio stood at 1.4 on an FY23 basis, higher than that of its peers. Nevertheless, this ratio has shown improvement from 2.57 in FY21, which was a cause for concern.
Also Read: Yatharth Hospital IPO Details | GMP, Date, Price, Review
Expert Opinion:
Sushil Finance acknowledges that Yatharth Hospital operates in a competitive segment with high fixed costs, which may potentially impact its profitability. Additionally, unfavorable pricing on medical supplies and the inability to pass on cost increases to payers could further affect the company’s profitability.
However, considering the pros and cons, cash surplus investors may find investing in the IPO worthwhile.
About Yatharth Hospital:
Yatharth Hospital operates three cutting-edge super-specialty hospitals in the Delhi NCR area. In April 2022, the hospital made a substantial acquisition when it purchased a 305-bed multi-specialty centre in Orchha, Madhya Pradesh. The total number of beds under their management increased dramatically to an outstanding 1,405 beds as a result of this smart purchase. The hospital network has a staff of 609 committed and skilled doctors as of March 2023, a tribute to their dedication to provide top-notch medical treatment and expertise to its patients.
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