Shalby Hospitals’ Rs 504.80 crore initial public offer (IPO) opened for subscription today. The issue closes on December 7. The leading multi-speciality chain of hospitals in India has fixed a price band of Rs 245 – 248 per equity share. The company expects to raise Rs 480 crore from a fresh issue of equity shares, while its promoter Vikaram Shah has put an offer for sale up to 10,00,000 equity shares. According to the company’s prospectus, proceeds of the IPO will be utilised towards repayment of borrowings availed by the company besides purchasing medical equipment for existing, recently set-up as well as upcoming hospitals. Incorporated on August 30, 2004, Shalby Limited, has a domestic and overseas outreach through a network of hospitals in India, and Outpatient Clinics and Shalby Arthroplasty Centre of Excellence (“SACE”) located in Africa, and the Middle East. We take a look at what top brokerages have to say about the issue.
Pointing to the strengths of the company, Axis Capital says that Shalby has an established presence and strong brand recall in Gujarat, and an emerging presence in western and central India. Further, the company incurs lower capital expenses by making optimal use of the available built-up area in their hospitals. Axis Capital also notes that the company is well guided, and continues to be led by a strong, highly qualified, experienced, and reliable management team. In its report, the brokerage firm also noted that company has entered into a revenue-sharing arrangement with the Mumbai-based Asha Parekh Hospital to construct 175 bed new hospital at a cost of Rs 120 crore. Since, Shalby is looking to expand to northern India, eastern India, and northeastern part of the country, Axis Capital says that such expansion may lead to lower revenue per bed.
“At the higher price band of Rs248, SHL’s share is available at a P/E multiple of 42.8(x) which is at a discount to its peer’s P/E(x) (Apollo Hospitals – 67.7x, Narayana Hrudayalaya – 90x and Healthcare Global – 118.4x). SHL is fundamentally strong and well managed company and at P/E (x) of 42.8 (considered post issue EPS), the issue is available at attractive valuation. Thus, we assign ‘subscribe’ rating to the issue,” Choice Broking said in its report.