IPO Analysis: GPT Healthcare Ltd

Mandar Wagh
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IPO Analysis: GPT Healthcare Ltd

IPO Rating: Apply for the long-term

About the Issue:  

GPT Healthcare Ltd is launching its initial public offering (IPO) for equity shares valued at Rs 10 each. The IPO price range is set between Rs 177 and Rs 186 per equity share, resulting in a total issue size of Rs 525.14 crore at the upper price band.  

The IPO is scheduled to commence on February 22, 2024, and will conclude on February 26, 2024. The market lot size for the IPO is 80 shares, with the option to apply for multiples of this lot. Individual retail investors have the opportunity to apply for a maximum of 13 lots, equivalent to 1,040 shares or a total investment of Rs 1,93,440 assuming the upper price band.   

IPO Details
IPO Opening Date  February 22, 2024
IPO Closing Date  February 26, 2024
Issue Type  Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price  Rs 177 to Rs 186 per equity share
Min Order Quantity  80 shares
Listing At  BSE, NSE
Total Issue 28,233,323 shares of FV Rs 10*
(Aggregating up to Rs 525.14 Cr)*
Fresh Issue 2,150,537 shares of FV Rs 10*
(Aggregating up to Rs 40 Cr)*
Offer for Sale 26,082,786 shares of FV Rs 10*
(Aggregating up to Rs 485.14 Cr)*
QIB Shares Offered  50% of the Offer
Retail Shares Offered  35% of the Offer
NII (HNI) Shares Offered 15% of the Offer
*At Upper Price Band  

Objects of the Issue  

The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the repayment or prepayment, in full or in part, of all or a portion of certain outstanding borrowings availed by the company and for general corporate purposes.

Promoter holding  

GPT Sons Private Limited, Dwarika Prasad Tantia, Dr Om Tantia, and Shree Gopal Tantia are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 67.34 per cent in the company.   

Company profile  

The company stands as a leading corporate healthcare entity in Eastern India, operating a network of mid-sized full-service hospitals branded as ILS Hospitals. Its offerings encompass integrated healthcare services, emphasizing secondary and tertiary care. As of September 30, 2023, the company operates four multispecialty hospitals located in Dum Dum, Salt Lake, and Howrah in West Bengal, as well as in Agartala, Tripura, boasting a combined capacity of 561 beds.

It offers an extensive array of healthcare services spanning over 35 specialities and super specialities, including internal medicine and diabetology, nephrology, gynaecology, critical care, gastroenterology, orthopaedics and joint replacements, interventional cardiology, neurology, neurosurgery, paediatrics, and neonatology. Additionally, each hospital provides integrated diagnostic services and pharmacies to cater to the needs of patients.

Financials  

Rs (in crore) FY21 FY22 FY23 H1FY24
Revenue 243 337 361 204
Profit before tax (PBT) 28.9 54.1 56 33.7
Net Profit 21 41.7 39 23.4

The company has effectively enhanced its top-line growth over recent years. Additionally, net profits have shown robust growth, albeit experiencing a slight decline in FY23 following an impressive year-on-year growth of approximately 100 per cent in FY22. The figures for the first half of FY24 were similarly positive, suggesting continued strong growth for the full fiscal year of FY24. The company boasts a return on equity (RoE) and return on capital employed (RoCE) of 24 per cent and 26 per cent, respectively, for the fiscal year 2023.

Valuation and outlook 

Company Name P/E P/B RoE (%)
GPT Healthcare Ltd 32 9 24
Listed Peers
Global Health Ltd 83 13 16
Krishna Institute of Medical Sciences Ltd 53 9 24
Jupiter Life Line Hospitals Ltd 129 8 22
Yatharth Hospital Ltd 63 5 44
Kovai Medical Center & Hospital Ltd 28 5 17
Shalby Ltd 40 3 8

The issue is priced with a P/BV ratio of 8.67 times, calculated using its Net Asset Value (NAV) of Rs 21.45 as of September 30, 2023. When we calculate the PE ratio for the company by considering the annualized FY24 earnings relative to the fully diluted paid-up equity capital, the resulting PE ratio stands at 32. GPT Healthcare Ltd demonstrates superior performance compared to its listed peers in terms of both valuation and returns.

India also enjoys advantages in medical tourism, drawing patients from neighbouring countries like Bangladesh, Nepal, and Bhutan who seek high-quality healthcare services. Eastern India, in particular, holds a strategic advantage in medical tourism due to its comparatively lower average treatment costs compared to the northern and western regions of the country. Additionally, Eastern India is more accessible to these neighbouring countries, further enhancing its appeal as a destination for medical value travel.

With the concentration of hospitals in Eastern India, the company is strategically positioned to capitalize on the anticipated growth in the healthcare sector within this region and neighbouring states. This advantageous position stems from the company’s early-mover advantage, strategically situated hospitals, and strong brand presence. Hence, we advise investors to contemplate subscribing to the offering with a long-term perspective.

DSIJ's 'Value Pick' service recommends long-term stocks based on Value Investing Philosophy. If this interests you, do download the service details here.

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