Investors and analysts, in the pharmaceutical and healthcare sectors are showing interest in Yatharth Hospital IPO. The company has a history of success promising growth projections and strategic plans for expansion making it highly recommended to subscribe to their offering. Additionally, Yatharth Hospitals’ cost-effective services, planned expansion, in regions, and debt-free status after the IPO make it more appealing.
In recent months, the pharmaceutical and healthcare sectors have captured the attention of fund managers, evident from the surge in share prices of various stocks within these industries. Against this backdrop, the plans of Yatharth Hospital to go public have garnered significant interest among analysts. Many experts tracking the company’s Initial Public Offering (IPO) recommend subscribing to the issue due to its impressive financial track record, optimistic growth projections, and expansion strategies.
Sankita V, an analyst at Canara Bank Securities, pointed out that Yatharth Hospital has recently introduced specialized services like kidney transplantation, bone marrow transplantation, and oncology departments. While these services add to the hospital’s costs in the medium to long term, it may put some pressure on margins. The hospital’s revenue is largely derived from government deals (34 percent), which could extend debtor days and impact margins. Nonetheless, Sankita V still recommends subscribing to the IPO for potential listing gains.
Yatharth Hospital holds a prominent position among the top 10 largest hospitals in Delhi-NCR, boasting a bed capacity of 1,405, with 394 beds dedicated to critical care. Notably, the hospital offers services at rates that are 20 percent cheaper than its peers. The company is also planning to expand its presence in and around Uttar Pradesh and Delhi.
At the upper price band of Rs 300, Geojit Financial Services believes that Yatharth Hospital is reasonably priced with a P/E ratio of 39.2x (on FY23 EPS) compared to its peers. Given the company’s consistent revenue growth, stable margins, strategic acquisitions, anticipated revival of medical tourism, and promising industry outlook, the broker assigns a ‘subscribe’ rating on a medium to long-term basis.
Comparing Yatharth Hospital’s P/E ratio with its competitors, Apollo Hospitals, Fortis Healthcare, Narayana Hrudayalaya, and Max Healthcare, it appears to be competitively priced.
The company aims to raise a total of Rs 676.7 crore at the lower price band and Rs 686.55 crore at the upper price band through the public issue. This includes fresh shares worth Rs 490 crore and an offer-for-sale (OFS) of 65.51 lakh equity shares by promoters Vimla Tyagi, Prem Narayan Tyagi, and Neena Tyagi.
Yatharth Hospital has a clear plan for the use of the proceeds from the fresh issue. It intends to repay debts, invest in hospital infrastructure, fund inorganic growth initiatives, and allocate funds for general corporate purposes.
Over the past three fiscal years, the company has demonstrated a stable operating and financial performance with consistent growth. The EBITDA has grown by an average of 41.29 percent, from Rs 67.01 crore in fiscal 2021 to Rs 133.76 million in fiscal 2023. Similarly, the net profit has shown an upward trend, increasing from Rs 19.58 crore in fiscal 2021 to Rs 44.16 crore in fiscal 2022, and further to Rs 65.76 crore in fiscal 2023.
Vikas Jain, Senior Research Analyst at Reliance Securities, highlighted the dominance of private healthcare expenditure in India’s current healthcare landscape. Furthermore, certain North Indian regions, such as Haryana, Uttar Pradesh, and Uttarakhand, have lower than average doctor and nurse density per 10,000 people. This is expected to improve in the future, which bodes well for Yatharth Hospital’s expansion plans.
Jain also emphasized that Yatharth’s recent acquisition of the Jhansi-Orchha hospital aligns with its strategy to expand into new geographies and strengthen its presence in the regional healthcare market. Given the company’s strong financials, growth potential in Northern India, and the fact that it will be debt-free post-IPO proceeds, Jain recommends subscribing to the issue.
