Yatharth Hospital lists at 2% premium to issue price

On the 7th of August, Yatharth Hospital & Trauma Care Services debuted on the bourses at a price that was only a 2% premium over its issue price. The stock's predicted listing premium of 20% was hurt by the lacklustre mood of the market as a whole.

Despite an initial issue price of Rs 300, the stock opened on the BSE at Rs 304 and on the NSE at Rs 306. Some of the reasons for the positive listing were the hospital chain's status as a leading super speciality provider in the Delhi NCR region, its wide range of specialties, and its sustained operational and financial growth.

On July 26-28, 36.16 times the Rs 687 crore public issue was subscribed. Qualified institutional investors purchased 85.10 times their quota, followed by high net worth individuals who bid 37.22 times their allocation, and ordinary investors who bid 8.34 times their quota.

Both a new issuance of Rs 490 crore and an offer for sale by the promoters totaling Rs 196.55 crore made up the public issue.

The 1,405 beds at Yatharth Hospital's four facilities come from its three Delhi NCR super-specialty hospitals and one multi-specialty facility in Madhya Pradesh.

Increases in inpatient traffic, occupancy rates, and average revenue per occupied room contributed to the company's 51% CAGR in revenue growth from fiscal years (FY) 21–FY 23. Return on equity went up from 25.06 percent to 35.95 percent, and the PAT margin went up from 8.5 percent to 12.64 percent over the same time period.

The debt-to-equity ratio for Yatharth Hospital in FY23 is now 1.5x. Following the IPO, the debt-equity ratio will be lowered to 0.03x after repayment of Rs 245 crore.

As compared to its competitors, Nirmal Bang's 20.9x FY23 EV/EBITDA valuation for Yatharth seems acceptable, given the company's high ROE (36% ) and ROCE (24.4%).

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Long-term structural considerations, rising affordability, and the potential of the Ayushman Bharat scheme are expected to propel India's healthcare delivery business to a robust 11.3% CAGR between FY23 and FY27, according to CRISIL. Analysts have identified this as a significant boon for Yatharth Hospital.

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