5 Things to Know about Global Health IPO

One of the biggest thrills of Diwali is Diwali shopping! Shopping becomes more fun because of all the lucrative discount offers.

Getting good quality products at cheap prices, feels like an achievement, doesn't it? This is the exact reason why investors find IPOs attractive.

It is believed that in an initial public offer (IPO), an investor can get company shares at a cheaper price. Investors also look forward to earn easy money through listing gains.

However, easy money is an illusion. One has to be careful while investing in IPOs especially considering the fate of recent IPOs.

Nowadays, shares in the offer aren't available at cheaper prices, in fact, there may be valuation concerns, case in point Zomato IPO and Paytm IPO.

Zomato's issue was priced at Rs 72 to Rs 76, and the stock went on to double from those levels in a matter of months. Whereas valuation guru Aswath Damodaran had pegged Zomato's true value at just Rs 41 per share.

Hence one has to be careful while analysing an IPO. Today, we take a look at the IPO of Global Health, which is opening next week.

The healthcare company's IPO will open for subscription on 3 November 2022. Here are the key details.

Issue period: 03 November 2022 to 07 November 2022

Issue size: Rs 22.1 bn (fresh issue for Rs 5 bn offer for sale for Rs 17.1 bn)

Price band: Rs 319 to Rs 336 per equity share

Bid lot: 44 shares and multiple thereof

Application limit: Minimum one lot maximum thirteen lots

Face value: Rs 2 per equity share

The company has reserved not less than 50% shares of the offer for qualified institutional buyers (QIB). It has reserved not less than 15% for non-institutional buyers (HNI). Hence not more than 35% of shares are available for retail individual investors.

Tentative IPO allotment date: 11 November 2022

Tentative listing date: 16 November 2022

Here are 5 important details about Global Health IPO.

#1 About the company

Global Health is one of the largest private multi-speciality tertiary care providers operating in the North and East regions of India.

The company has key specialities in cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopaedics, liver transplant, and kidney and urology.

Global Health has a network of four hospitals currently in operation (Gurugram, Indore, Ranchi, and Lucknow) under the Medanta brand. The company established 'The Medanta Institutional Tissue Repository' in 2017 to promote biomarker and other tissue-based research.

#2 Financial position

Global Health's finances are in good condition.

The financial figures have seen a marginal fall in the financial year 2020-21. However, the figures have seen a sharp recovery in the financial year 2021-22.

Even the return on net worth has increased in the financial year 2021-22.

Financial snapshot

Particulars	31-Mar-22	31-Mar-21	31-Mar-20
Revenues (Rs m)	22,058.20	14,781.60	15,442.70
Revenue Growth (%)	49.20%	-4.30%
Expenditure Before Tax	19,252.60	14,456.90	14,803.80
% of Total Income	87.3	97.8	95.9
Net Profit	1,962.00	288.1	363.3
Net Profit Margin (%)	8.9	1.9	2.4
Net Worth	16,160.10	13,823.40	13,495.40
Return on Net Worth (%)	12.1	2.1	2.7
Basic Earnings per share (Rs)	7.8	1.2	1.5

Data Source: Company's Red Herring Prospectus (RHP)

#3 Peer comparison

As per the RHP, Apollo Hospitals Enterprise, Fortis Healthcare, Max Healthcare Institute, and Narayana Hrudayalaya are its listed peers.

Peer Comparison

Company	Total Income (2022) (Rs m)	Net Profit	EPS (Basic) (Rs)	Return on Net Worth (%)
Global Health	22,058.20	1,962	7.8	12.1
Apollo Hospitals Enterprise	147,408.00	11,011	73.4	18.9
Fortis Healthcare	57,449.50	7,658	7.4	11.2
Max Healthcare Institute	40,588.20	6,051	6.2	9.6
Narayana Hrudayalaya	37,358.80	3,506	16.8	22.9

Data Source: Company's Red Herring Prospectus (RHP)

#4 Arguments in favour of the business

• It is a tertiary and quaternary care provider in India recognised for clinical expertise, particular in dealing with complicated cases.
• The company actively focuses on focus on clinical research and academics.
• It focuses on under-served areas with dense populations and presence in top or capital cities of large states (NCR, Lucknow, and Patna).
• It has huge growth opportunities in existing facilities and diversification into new services, including digital health.
• It has an experienced senior management team and strong institutional shareholder support.

#5 Risk factors

• Stringent restrictions to slow down the spread of Covid-19, including limitations on international and local travel, had and could continue to harm the company's business.
• It has loss-making subsidiaries.
• It has concentrated business. It operates four hospitals and one is under construction, if anyone of these hospitals were to stop functioning then there will be a major impact on its business.
• It may not have sufficient insurance coverage to cover all possible economic losses and this may harm its business.
• It is subject to medical and legal risks associated with the operation of medical facilities and in-house pharmacies, including negative publicity.

To conclude

Medanta - the hospital chain of Global Health, is a big name in healthcare industry, and is quite popular for its world-class doctors and excellent facilities.

Also, Global Health's financial position is quite good. The sharp recovery in the financial year 2022 suggests bright prospects for the company.

However, it cannot be ignored the company operates in a sector with strong competition and high regulations. Providing affordable care with the best facilities is a difficult job.

Hence, an investor should meticulously analyse the pros and cons before applying. He should align his investment horizon and risk-bearing capacity before he invests.

Stay tuned to get further updates on this IPO and all upcoming IPOs in the market.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...