Global Health IPO: Medanta operator Global Health Ltd’s IPO opened for public subscription on Thursday and will close on Monday, 7 November. The company has set a price band of Rs 319-336 a share for the initial share sale. Ahead of the IPO, the company has mobilised Rs 662 crore from anchor investors. Global Health IPO consists of a fresh issue of equity shares aggregating to Rs 500 crore, and an offer for sale (OFS) of up to 5.08 crore equity shares. At the upper end of the price band, the company is expected to fetch Rs 2,206 crore through the IPO. Proceeds from the fresh issue will be used to pay debt and general corporate purposes.

Global Health IPO shares were commanding a grey market premium of Rs 25 on Thursday, according to the people dealing in unlisted securities. Half of the issue size has been reserved for qualified institutional investors (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors (NIIs). Investors can bid for a minimum of 44 shares and in multiples thereof. Global Health Ltd shares are expected to list on leading stock exchanges BSE and NSE on 16 November 2022.

“In view of Global Health Limited’s strong clinical expertise, focus on clinical research and academics, focus on under-served areas with dense population, presence in top capital cities of large states, decent brand equity, experienced management team and valuation comfort, we recommend a ‘SUBSCRIBE’ to the issue.”

“On valuation front, the company is available at 43.24x PE for FY22 which appears to be attractive as compared to industry peers. The company has well diversified tertiary care facilities and one of the largest hospitals in North and East region along with healthy return ratios. Hence, we recommend for subscribe the issue for long term.”

“Over FY19-22, Medanta’s operational and financial performance has been strong and weathered the challenge of pandemic. Upon operation of its Noida hospital, Medanta will have its bed capacity exceed over 3,500 beds which will aid topline and margin expansion. We believe Medanta is being offered at a reasonable valuation of 19.9x FY22 EV/EBITDA and 45.9x FY22 earnings considering peer valuation, strong long term structural factors and future business growth opportunity in the company. We recommend ‘Subscribe’ to the issue from a long term perspective.”

“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.”

“There is huge growth in the healthcare sector and the super specialization market in India is highly under-penetrated. This puts Global Health (Medanta) in a strong position to further grow and expand into different geographies. On the upper end of the price band, the issue is valued at a P/E of 43.2x based on FY22 earnings which we feel is fairly priced and we, therefore, recommend to “SUBSCRIBE” the IPO for the benefit of listing gains.”

“At higher price band, Global Health is demanding an EV/Sales multiple of 4x, which is lower than the peer average. Thus the IPO is attractively priced. Considering the strong long term structural factors and the anticipated business growth of the company we assign a “SUBSCRIBE” rating for the issue.”