Shalby IPO opens today, analysts say issue at discounted rate
Mumbai: The initial public offering (IPO) of Shalby Ltd will open for subscription on Tuesday with a price band of Rs245-248 per share. The group, which runs a multi-specialty hospital chain, aims to raise Rs504.8 crore through the share sale that will close on 7 December.
Analysts said that the issue is offered at a discounted rate to its peers. “At the higher price band of Rs248, its share is available at a price-to-earnings (PE) multiple of 42.8 times which is at a discount to its peer’s PE of Apollo Hospitals at 67.7, Narayana Hrudayalaya at 90 and Healthcare Global at 118.4,” said Choice Equity Broking Private Ltd. It said in a report on 1 December that Shalby is fundamentally strong, well-managed company and the issue is available at attractive valuation.
According to Hem Securities Ltd, the company has leadership in orthopaedics with integrated and scalable business model enhancing patient reach and is experienced player with longstanding presence.
The company’s hospitals are tertiary care hospitals, few of which also offer quaternary healthcare services to patients in various areas of specialisation such as orthopaedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations. As on the date, the company has provided inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate bed capacity of 2,012 beds.
With strong expansion the company debt has increased to Rs310.9 crore by Q1FY18 and debt to equity ratio increased to 1.1 from 0.3 in FY14. The company will use Rs300 crore of the fresh proceeds to retire the debt, which would reduce Rs27 crore of finance cost in FY18 and make the company almost debt free. Rest of the proceeds will be used for purchase of medical equipment for existing, recently set up and upcoming hospitals worth of Rs63.58 crore, purchase of interiors, furniture and allied infrastructure for upcoming hospitals worth of Rs11.18 crore.
“On financial front, its operating income grew at an average of 8% during FY15-FY17 in line with peers’ average while average earnings before interest, tax, depreciation and amortization (EBITDA) margin maintained 21.9% and average return on equity (ROE) during the last three fiscals stood at 19.0%,” said Choice Equity Broking.