Global Health Limited is one of the largest private multi-speciality tertiary care providers operating in the North and East regions of India. It has five hospitals currently in operation located in Gurugram, Lucknow, Indore, Ranchi and Patna and the sixth hospital is under construction in Noida. The hospitals operate under the “Medanta” brand. The company has key specialities in cardiology and cardiac sciences, neurosciences, oncology, digestive and hepatobiliary sciences, orthopaedics, liver transplant, and kidney and urology. The company provides healthcare services in over 30 specialities and engages over 1300 doctors and has 2467 beds across its operational hospitals. The company’s flagship hospital in Grurgram is approximately 2.7mn sq ft with 1391 installed beds as of 30th June 2022. It also operates six multi-speciality clinics in DLF Cybercity Gurugram, Delhi Airport, South Delhi, Darbhanga, Patna and Subhash Chowk Gurugram. Upon completion of the hospital in Noida, the company expects the number of beds to exceed 3500 at the end of Fiscal 2025. The company also provides home care service which provides sample collection, delivery of medicine, preventive health checks, paediatric vaccinations and nursing services.
Objects of the issue:
The IPO proceeds of the fresh issue will be used towards the following purposes:
- Repayment/prepayment of borrowings, in full or part, of the Subsidiaries, GHPPL and MHPL
- General Corporate Purposes
Investment Rationale:
Clinical Expertise and Focus on Clinical Research
The company focuses on super specialization and clinical expertise by working on a high number of complex cases. The company has a doctor-led management model enabling sub-specialisation to provide the highest level of clinical expertise to the patients. It also has a research facility “The Medanta Institutional Tissue Repository” in 2017 to promote biomarker and other tissue-based research. The company is currently developing an algorithm to increase productivity and accuracy in medical diagnosis, particularly in radiology scans.
Large-scale hospitals with sophisticated infrastructure and steady growth strategies
The hospitals that the company has built are on a large-scale basis. Its flagship hospital in Gurugram has a built-up structure of more than 2 million. The company’s hospitals are built to install additional beds without any significant investment. The hospital has an installed bed capacity of 473 beds as of June 30, 2022, with a further capacity to accommodate over 900 beds. The hospitals also have an international-grade infrastructure. Across all the hospitals 30% are dedicated to critical care and the
chain has a total of 70 OPDs. The company is also focusing on diversification into new services like digital health. The company has scaled up its telemedicine and remote delivery of healthcare services.
Valuation and Outlook:
There is huge growth in the healthcare sector and the super specialization market in India is highly under-penetrated. This puts Global Health (Medanta) in a strong position to further grow and expand into different geographies. The company also has steady ARPOB and EBITDA levels through the fiscal years 2020, 2021 and 2022. The company primarily focuses on under-penetrated and underserved geographies with dense populations and government schemes such as Ayushman Bharat Scheme present the company to expand in such under-served areas to reach the low-income population. However, the company’s subsidiaries GHPPL and MHPL have incurred losses and medical and legal risks remain the key risk facts. On the upper end of the price band, the issue is valued at a P/E of 43.2x based on FY22 earnings which we feel is fairly priced and we, therefore, recommend to “SUBSCRIBE” the IPO for the benefit of listing gains.
