Gujarat Kidney IPO Day 3 Highlights: Issue booked 5.21x — GMP slumps sharply; all eyes on allotment

Gujarat Kidney IPO booked 5.21 times as of the final day of the bidding process on Wednesday. The issue received bids for 6,89,68,576 shares as against 1,32,26,880 shares on offer. Here's how different quotas were booked:

QIB: 1.06x

NII: 5.73x

Retail: 19.04x

The company has a strong presence across central, north, and south Gujarat and, on a consolidated basis, operates seven hospitals and four in-hospital pharmacies. As of June 30, 2025, it has a total bed capacity of around 490 beds, approved beds of approximately 445, and operational beds of about 340.

At the upper end of the price band of ₹114, the company is valued at a P/E multiple of 61.6x FY25 earnings. We therefore recommend a “SUBSCRIBE” rating for this issue.

• The company intends to deploy a portion of the IPO proceeds to acquire a stake in Parekh’s Hospital Private Limited and subsequently assume its management and operations. Any delays, inability to complete the acquisition on agreed terms, or challenges in post-acquisition integration could adversely impact the company’s expansion plans, operational performance, and future growth prospects.
• The company’s expansion plans, including the construction of a new hospital, are subject to risks related to delays in regulatory approvals, execution, and capital expenditure procurement. As orders for such capex are yet to be placed, there is no assurance that equipment and infrastructure can be sourced promptly or at commercially viable prices, which could delay project commissioning and impact returns.
• Given the company’s limited operating history at its current scale and structure, its ability to compete effectively with established healthcare players remains uncertain.

Gujarat Kidney IPO booked 4.86 times so far. Here's how different quotas were booked:

QIB: 89%

NII: 5.53x

Retail: 17.77x

Gujarat Kidney and Super Speciality Limited has grown its scale and profitability on the back of an asset-heavy but efficient hospital model, with improving margins driven by a better case mix, higher occupancy, and operating leverage from its existing infrastructure.

The entire ₹250.80 crore (100%) IPO is a fresh issue, with zero offer for sale (OFS), signalling strong promoter confidence. Approximately ₹77 crore is earmarked for the landmark acquisition of Parekhs Hospital in Ahmedabad, while ₹30 crore will fund a new greenfield women’s hospital in Vadodara. Additional funds are allocated for robotic surgical equipment and increasing stakes in high-performing subsidiaries.

Despite the competitive nature of the healthcare sector, Gujarat Kidney’s asset-light integration model and its dominance in the renal care niche position it well to capitalise on rising demand for quality healthcare in semi-urban India. We recommend a ‘SUBSCRIBE’ rating for long-term investors.

Niche Specialization: High-entry-barrier focus on renal sciences (Nephrology and Urology) ensures a "sticky" patient base with recurring needs (like dialysis), creating steady, defensive revenue.

Efficient Scalability: The "asset-light" roll-up strategy (acquiring and leasing existing hospitals) minimizes the 4–5 year build-from-scratch delay, allowing immediate bottom-line contributions.

Strong Financials: The company achieved 637% revenue growth (FY24 to FY25) with sector-leading efficiency, translating to an EBITDA margin of 41.12% and a ROCE of 37.65%.

Growth-Focused IPO: The ₹250.80 crore issue is 100% fresh issue with zero promoter exit (OFS), meaning all capital is strictly deployed for expanding capacity and technology like robotic surgery.

Regional Dominance: Strong concentration in Tier-2/3 Gujarat cities (Vadodara, Bharuch, Godhra) provides a competitive opportunity in underserved markets where national corporate chains have minimal presence.

As per Dun & Bradstreet estimates, India’s hospital sector is expected to generate an annual turnover of nearly ₹6,496 billion in FY24 and is projected to reach around ₹8,200 billion by FY26E, reflecting a CAGR of 12.4%. The industry is well-positioned for substantial growth in the coming years.

The business of mid-sized multi-speciality hospitals and integrated healthcare services was transferred to the company from the promoter-owned business under a Business Transfer Agreement in Feb’24, which implies a limited operating history.

The proposed acquisition of Parekhs Hospital from the net proceeds may face execution risk due to its size and scale.

Gujarat Kidney is a mid-sized multispeciality hospital chain operating across the central region of Gujarat. It has a portfolio of seven multispeciality hospitals and four pharmacies within the hospital premises.

The company offers both surgical services (secondary care) and super-speciality surgical services (tertiary care). Additionally, it is planning to acquire Parekhs Hospital in Ahmedabad, which has a capacity of 49 beds.

During FY25, the company delivered Revenue/EBITDA/PAT of ₹40.2 crore/ ₹16.5 crore/ ₹9.4 crore, up 742.9%/748.2%/449.2% YoY, respectively.

We believe the company is fairly valued and hence assign a Neutral rating to the issue.

— SBI Securities

Gujarat Kidney IPO booked 3.49 times so far. Here's how different quotas were booked:

QIB: 46%

NII: 3.79x

Retail: 13.70x

The company operates across multiple hospitals using leased properties, allowing it to expand without significant capital expenditure on land, buildings, medical equipment, or necessary furniture and fixtures. Additionally, the company is in the process of acquiring Parekhs Hospital in Ahmedabad for ₹77 crore using proceeds from the IPO.

Gujarat Kidney & Super Speciality Limited (GKSSL), incorporated in 2019, operates a chain of multi-specialty hospitals in Gujarat, with a strong presence in secondary and tertiary care.

The company currently runs seven hospitals and four pharmacies, offering services across a wide range of specialties such as urology, nephrology, cardiology, oncology, and orthopaedics, with a total operational bed capacity of 340 beds across its facilities.

Gujarat Kidney & Super Speciality Limited proposes to utilise the proceeds from the Offer for the following purposes:

• Proposed acquisition of Parekhs Hospital, Ahmedabad – ₹77 crore

Funds will be used to acquire Parekhs Hospital in Ahmedabad to expand the company’s healthcare footprint.

• Part-payment for Ashwini Medical Centre – ₹12.4 crore

A portion of the proceeds will be allocated towards part-payment of the purchase consideration for Ashwini Medical Centre.

• Acquisition of additional stake in Harmony Medicare – ₹10.78 crore

Funds will be used to acquire additional shareholding in Harmony Medicare Private Limited, increasing the company’s stake.

• Capital expenditure for new hospital in Vadodara – ₹30.1 crore

Proceeds will be utilised to set up a new hospital in Vadodara, expanding healthcare services.

• Robotics equipment for Vadodara hospital – ₹6.8 crore

The company will purchase robotics equipment for the Gujarat Kidney & Super Speciality Hospital in Vadodara.

• Repayment of secured borrowings – ₹1.2 crore

A portion of the proceeds will be used to repay certain secured borrowings to strengthen the company’s financial position.

The company operates a multispecialty hospital and related services chain in central Gujarat.

Valuation appears stretched at ~61x P/E, significantly higher than most listed hospital peers.

Smaller scale increases risk, as execution delays or integration issues can materially impact earnings.

This IPO may not be suitable for most investors at the current stage. At the current price band, the IPO appears aggressively valued, leaving limited room for upside in the near to medium term. Investors with a conservative or medium-term investment approach are advised to wait for clearer post-listing price discovery.

Gujarat Kidney IPO opened for the third and final day at 10 am today. Investors can place their bids till 5 pm. Issue has sailed through already, amid strong demand from HNIs and retail investors.

Gujarat Kidney IPO got subscribed 2.67 times on the second day of share sale on Tuesday.

The category for Retail Individual Investors (RIIs) fetched 10.45 times subscription, while the quota for non-institutional investors got subscribed 2.95 times. The portion meant for Qualified Institutional Buyers (QIBs) received 34 per cent subscription.

Gujarat Kidney IPO GMP has seen a downfall. The latest Gujarat Kidney IPO GMP is ₹2.5 apiece. At the latest GMP, Gujarat Kidney listing price could be ₹116.5, a premium of 2.19%.

Shares of Gujarat Kidney IPO are slated to list on BSE and NSE on December 30.