Global Health IPO opens today: Should you subscribe to the share sale?

The initial public offer (IPO) of Dr Naresh Trehan-led Global Health Limited will open today. Trehan, a renowned cardiovascular and cardiothoracic surgeon, is also the promoter of the company. The company operates and manages hospitals under the Medanta brand. The firm has raised Rs 662 crore from anchor investors. Global Health has decided to allocate 1.97 crore equity shares at Rs 336 apiece, aggregating the transaction size to about  Rs 662 crore.

The anchor investors include--Government of Singapore, Nomura, Axis Mutual Fund (MF), HDFC MF, Aditya Birla Sun Life MF, SBI MF, ICICI Prudential MF, Kotak MF, Max Life Insurance Company and SBI Life Insurance Company. The IPO of the multi-speciality tertiary care provider will end on November 7. The company will offer its shares in a price band of Rs 319 to Rs 336.  At the upper end of the price band, the share sale is expected to fetch Rs 2,206 crore.

The lot size of Global Health IPO is 44 shares for which one will have to spend Rs 14,784. A retail individual investor can submit bids for up to 13 lots or 572 shares by spending Rs 1,92,192. The grey market premium (GMP) of Global Health IPO stands at Rs 15 today, according to IPO Watch. This implies that the stock is likely to be listed at Rs 351. The firm will carry out allotment of shares on November 11, 2022.

The shares are likely to be listed on BSE and NSE on November 16, 2022. KFin Technologies Limited is registrar to the IPO.

The 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 by the company's shareholders and the promoters. The net proceeds from the IPO will be used for repayment/prepayment of borrowings, in full or part, of the subsidiaries, GHPPL and MHPL and general corporate purposes.

Kotak Mahindra Capital Company Limited, Credit Suisse Securities (India) Private Limited, Jefferies India Private Limited and JM Financial Limited are the book running lead managers for the Global Health IPO. The promoter currently holds 35.03 per cent stake in the company. After the IPO, this will fall to 33.08 per cent. Public holding will increase from the current 64.97% to 66.92%.

In Q1 of the current fiscal, Global Health reported a 27.1% Y-o-Y rise in consolidated revenue to Rs 617.2crore. EBITDA  and PAT margin both rose by around 90 bps each on Y-o-Y basis. On a TTM basis, consolidated top-line stood at Rs.2,298.3 crore with an EBITDA and PAT margin of 21% and 9.3%, respectively.

Here's a look at what brokerages said about the prospects of the IPO.

Geojit has given a subscribe rating for a medium term to the IPO.

"At the upper price band of Rs 336, Medanta is available at a P/E of 46x (FY22 EPS), which is in-line compared to its peers. Considering its strong brand value, new hospital addition, rise in ARPOB, pick up in medical tourism, increasing affordability for healthcare services and promising industry outlook, we assign a 'Subscribe' rating on a short to medium term basis," said Geojit.

Choice Broking too has assigned a subscribe call to the share sale.

"At higher end of 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," said Choice Broking.

Global Health Limited 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.

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