Global Health one of the largest
private multi-speciality tertiary care providers operating in the North and
East regions of India in terms of bed capacity and operating revenues, with key
specialties of cardiology and cardiac science, neurosciences, oncology,
digestive and hepatobiliary sciences, orthopaedics, liver transplant, and
kidney and urology.
Under the Medanta brand, the company
has a network of five hospitals currently in operation in Gurugram, Indore,
Ranchi, Lucknow and Patna. It also has one hospital in Noida, which is under
construction.
As of June 30, 2022, the company
provided healthcare services in over 30 medical specialties and engage over 1,300
doctors led by highly experienced department heads and, spanning an area of 4.7
million sq. ft., its operational hospitals have 2,467 installed beds.
The company was founded by Dr.
Naresh Trehan, a world-renowned cardiovascular and cardiothoracic surgeon. He
has been awarded the prestigious Padma Bhushan and the Padma Shri, the third
and fourth-highest civilian awards in India, and the BC Roy award, in
recognition of his distinguished contribution to medicine.
The company’s hospital at Gurugram
was ranked as the best private hospital in India for three consecutive years in
2020, 2021 and 2022, and was the only Indian private hospital to be featured in
the list of top 200 global hospitals in 2022 by Newsweek.
The company’s primary source of revenue is from IPD
admission, which amounted to Rs 1194.12 crore, Rs 1186.53 crore, Rs 1740.59
crore, Rs 403.20 crore and Rs 492.34 crore accounting for 80.65%, 83.69%,
82.87%, 85.21% and 82.60% of total income from healthcare services in Fiscals
2020, 2021 and 2022, and the three months ended June 30, 2021, and 2022,
respectively.
India’s bed density (bed count per
10,000 population) is of 15 beds (as for 2021) not only falls far behind the
global median of 29 beds but also lags other developing countries such as
Brazil (21 beds) and Malaysia (19 beds) as of 2017. It states that with its
population growing at almost 1% annually, India is expected to have more than
1.4 billion people by 2026, stressing the need for increased number of hospital
bed capacity. To serve Indian and international patients, the company has
gradually grown the number of beds to 2,467 installed beds as on June 30, 2022.
Further, the outpatient department facility of Patna hospital was launched in
2020 and the inpatient department facility of Patna hospital was inaugurated in
October 2021 and commenced operations during FY 2022.
As on June 30, 2022, the company’s
Patna hospital had 228 installed beds and is designed to accommodate over 500
beds. Additionally, its hospital in Noida is under construction and intended to
commence operation during FY2025, with an expected installed capacity of 300
beds.
The company intends to carefully
increase its bed capacity in existing facilities as well as consider utilizing
the land available for ancillary services. It expects the number of total
installed beds to exceed 3,500 at the end of FY 2025, which will cater to domestic
and international patients as part of its strategy to capitalize on medical
tourism.
In FY2021, the company took the
out-patient department pharmacies in-house at its Gurugram, Lucknow, Indore,
and Ranchi hospitals, and launched outpatient department pharmacy at south
Delhi clinic and home care services in Gurugram and New Delhi.
Its pharmacies provide convenient
access to necessary pharmaceuticals for patients. For home-care services, the company
has scaled up its telemedicine and remote delivery of healthcare services, and
the monthly average consultation via video and telephone in Gurugram increased
by 1,419.33% from 419 in FY 2020 to 6,366 in FY 2021 and by 33.60% to 8,505 in
FY 2022 and was 5,070 in the three months ended June 30, 2022.
The company intend to extend its
clinical services outside the hospital by growing home care business across
sample collection, medicine delivery and all possible aspects of care at home. Company
also intends to expand the delivery of care both before and after acute
interventions by focusing on preventive health and wellness as well as post
hospitalization continuing care and lifetime management of patients
(particularly for those suffering from chronic diseases).
Offer and its objects
The IPO comprises fresh issue of
equity shares worth up to Rs 500 crore and an offer for sale of Rs 1705.57
crore by existing shareholders Anant Investments and Sunil Sachdeva.
The price band for the IPO is Rs
319 to Rs 336 per equity share of face value Rs 2 each.
The objectives for the fresh issue
include Investment of Rs 375 crore in two subsidiaries, GHPPL and MHPL, in the
form of debt or equity for repayment/prepayment of borrowings and remaining
amount will be used for general corporate purposes.
The promoter is Dr. Naresh Trehan. Promoters
and promoter group hold an aggregate of 88,725,240 equity shares, aggregating to
35% of the pre-offer issued and paid-up equity share capital. The post IPO
shareholding for the same is expected to be around 33.08%.
The issue, through the book-building process, will open on 3rd
November 2022 and will close on 7th November 2022.
Strengths
The company has a track record of strong financial
performance. In FYs 2020, 2021 and 2022 and the three months ended June 30,
2021, and 2022, the company generated income from healthcare services of Rs
1480.57 crore, Rs 1417.84 crore, Rs 2100.39 crore, Rs 473.21 crore and Rs
596.08 crore, respectively. Revenue grew at a CAGR rate of 19.11% from FY2020
to FY2022.
Global health is leading tertiary and quaternary care
provider in India and is recognized for clinical expertise in particular
dealing with complicated cases.
The company is the only private hospital in India to feature
in Newsweek’s list of the top 200 global hospitals in 2021. It has achieved
this leadership position by the focusing of its experienced doctors on treating
complicated cases and ensuring at the same time the best quality of care.
The company is focused on clinical research and academics.
Doctors associated with its hospitals have published 451 peer reviewed indexed
journal publications between January 2021 and June 2022.
The company is currently working with Qure.ai to develop
artificial intelligence algorithms with the aim of increasing productivity, improving
the accuracy and speed of medical diagnoses, particularly in radiology scans.
The company has adopted a ‘doctor-led’ model of management. As
on June 30, 2022, the company has a team of more than 6,000 medical
professionals, including over 1,300 doctors and over 3,700 nurses and over
1,000 paramedical personnel. This doctor-driven culture of the organization has
allowed it to attract and retain some of the clinical leaders in India.
The company has chain of large-scale hospitals with
sophisticated infrastructure, medical equipment, and technology. Its greenfield
hospital at Gurugram has been designed with a focus on creating a safe and
efficient environment for patient treatment. Its Infrastructure and latest
technology have improved operational efficiency.
The company took swift measures to manage the costs and
liquidity in response to the shocks of covid-19, such as (1) reduction in
salaries for senior and middle management employees, (2) negotiation with
property owners/vendors for waiver/reduction in costs during impacted period,
and (3) tying up fresh working capital facility for meeting short-term
liquidity gaps.
The company has well-balanced mix of mature hospitals,
developing hospitals and under-construction hospitals.
The management is focused on under-served areas with dense
population as it presents significant room for medium-term growth and profit
margin expansion. Further, strategic locations in these key underserved areas
provide more opportunities to attract a wide base of patients.
The company is exploring long-term arrangements with
hospitals for managing specific specialities to promote an asset-light strategy
for operations and management. Additionally, the company has inherent advantage
of expanding services in existing facilities and diversification into new
services, including digital health.
The company is led by a dedicated and experienced management
team. Its management team members have industry and technical knowledge as well
as management expertise gained from their long tenure and wide exposure in the
healthcare industry.
Weaknesses
The company’s business has been materially and adversely
affected due to the ongoing Covid-19 pandemic. Stringent restrictions to slow
down the spread of Covid-19, including limitations on international and local
travel could have a negative impact on its business. In FYs 2020, 2021 and
2022, and the three months ended June 30, 2021, and 2022, income from health
care services derived from international patients amounted to Rs 170.02 crore,
Rs 56.24 crore, Rs 93.16 crore, Rs 17.11 crore and Rs 32.95 crore,
respectively, accounting for 11.22%, 3.95%, 4.44%, 3.62% and 5.53%, respectively.
Subsidiary MHPL incurred losses in FYs 2020 and 2021, and subsidiary
GHPPL incurred losses in FYs 2020, 2021 and 2022, and in the three months ended
June 30, 2021, and 2022. To continue operations, it may need financial support
in the form of debt or equity.
The company’s performance is highly dependent on doctors,
nurses, and other healthcare professionals. Its business will be impacted
significantly in case the company is unable to attract / retain such
professionals.
The company operate in an industry with high expenses such as
manpower, infrastructure and medical equipment maintenance and repair costs,
ancillary items, and pharmaceuticals. Any failure to pass on such costs to the
patients may have a material adverse impact on business.
Any failure to maintain or improve admissions/occupancy rates
may result in an ineffective deployment of capital expenditure and reduce
profit margins. Its occupancy rate was 54.85% in Fiscal 2020, which decreased
to 51.57% in FY2021, primarily due to the Covid19 pandemic. However, despite
this decline in occupancy rates, costs did not have a corresponding decrease.
Its under-construction facilities may experience delays in
construction.
Healthcare providers are subject to a wide variety of
governmental, state and local environmental laws and regulations.
Non-compliance with regulations applicable to the healthcare industry and
environmental regulations may subject the company to fines and adversely affect
its business.
The company sources major medical supplies, pharmaceuticals
and equipment from third-party suppliers and sub-contractors. Termination or
non-renewal of such contracts could have a material adverse impact on its
business.
There are certain outstanding legal proceedings involving the
company, its directors, subsidiaries, and promoter, which are pending at
different levels of adjudication before various courts, tribunals, and other
authorities. Any adverse outcome may adversely affect business and reputation.
The company may face delays in receiving payment of
outstanding dues from third parties. The primary collection risk of account
receivables relates to the failure by individual patients, corporate customers,
and their healthcare insurers to pay in a timely manner and in full for the
services. In FYs 2020, 2021 and 2022, the trade receivables turnover ratio was
9.58, 10.23 and 13.81, respectively, while in the three months ended June 30,
2021, and 2022, the trade receivables turnover ratio was 3.35 and 3.21,
respectively.
Valuation
For the quarter ended June 2022, consolidated
sales were up by 27.13% to Rs 617.21 crore compared to the quarter ended June
2021. The OPM increased by 91 bps to 21.44% which led to 32.74% increase in
operating profit to Rs 132.31 crore. Other income increased 53.18% to Rs 9.33
crore, while interest cost rose 14.32% to Rs 18.53 crore and depreciation
increased 15.03% to Rs 36.08 crore. PBT increased 49.56% to Rs 87.03 crore. Tax
expenses for the June 2022 quarter was Rs 28.32 crore compared to tax expense
of Rs 16.43 crore in June 2021. Net profit rose 40.60% to Rs 58.71 crore.
For FY2022, consolidated sales were up by 49.76%
to Rs 2166.59 crore compared to FY2021. The OPM increased by 756 bps to 20.79%,
which led to 135.35% increase in operating profit to Rs 450.53 crore. Other
income increased 24.87% to Rs 39.23 crore, while interest cost rose 18.33% to
Rs 79.49 crore and depreciation increased 5.27% to Rs 129.71 crore. PBT
increased 764.33% to Rs 280.56 crore. Tax expenses for FY22 was of Rs 84.36
crore compared to tax expense of Rs 3.66 crore in FY21. Net profit rose 581.25%
to Rs 196.20 crore.
The TTM EPS on post-issue equity works out to Rs 7.95. At the
upper price band of Rs 336, P/E works out to 42.28.
As of 31 October 2022, its listed peers such as Apollo
Hospitals Enterprise traded at TTM P/E of 73.22, Fortis Healthcare at TTM P/E
of 50.14, Max Healthcare Institute at TTM P/E of 68.25 and Narayana Hrudayalaya
at TTM P/E of 42.44.
For FY2022, Global Health’s OPM and ROE stood at
20.79% and 12.14% respectively, compared to 14.90% and 18.77% for Apollo
Hospitals Enterprise, 18.70% and 8.98% for Fortis Healthcare, 23.97% and 9.63%
for Max Healthcare Institute and 17.66% and 22.96% for Narayana Hrudayalaya, respectively.
Global Health: Issue highlights
|
For Fresh Issue Offer
size (in no of shares )
|
|
- On lower price band
|
1,56,73,981
|
- On upper price band
|
1,48,80,952
|
Offer size (in Rs crore)
|
500
|
For Offer for Sale Offer
size (in Rs crore)
|
|
- On lower price band
|
1619.28
|
- On upper price band
|
1705.57
|
Offer size (in no of
shares )
|
5,07,61,000
|
Price band (Rs)
|
319-336
|
Minimum Bid Lot (in no.
of shares )
|
44
|
Post issue capital (Rs
crore)
|
|
- On lower price band
|
53.79
|
- On upper price band
|
53.64
|
Post-issue promoter &
Group shareholding (%)
|
33.08
|
Issue open date
|
03-11-2022
|
Issue closed date
|
07-11-2022
|
Listing
|
BSE, NSE
|
Rating
|
45/100
|
Global health: Consolidated Financials
|
|
2003 (12)
|
2103 (12)
|
2203 (12)
|
2106 (3)
|
2206 (3)
|
Sales
|
1,500.42
|
1,446.74
|
2,166.59
|
485.49
|
617.21
|
OPM (%)
|
12.44%
|
13.23%
|
20.79%
|
20.53%
|
21.44%
|
OP
|
186.63
|
191.43
|
450.53
|
99.68
|
132.31
|
Other inc.
|
43.85
|
31.42
|
39.23
|
6.09
|
9.33
|
PBIDT
|
230.48
|
222.85
|
489.76
|
105.77
|
141.64
|
Interest
|
51.55
|
67.17
|
79.49
|
16.21
|
18.53
|
PBDT
|
178.93
|
155.67
|
410.27
|
89.56
|
123.11
|
Dep.
|
115.04
|
123.21
|
129.71
|
31.37
|
36.08
|
PBT
|
63.89
|
32.46
|
280.56
|
58.19
|
87.03
|
Share of Profit/(Loss) from Associates/JV
|
(0.02)
|
-
|
-
|
-
|
-
|
PBT
before EO
|
63.87
|
32.46
|
280.56
|
58.19
|
87.03
|
Exceptional items
|
-
|
-
|
-
|
-
|
-
|
PBT after EO
|
63.87
|
32.46
|
280.56
|
58.19
|
87.03
|
Taxation
|
27.54
|
3.66
|
84.36
|
16.43
|
28.32
|
PAT
|
36.33
|
28.80
|
196.20
|
41.76
|
58.71
|
Minority Interest
|
-
|
-
|
-
|
-
|
-
|
Net Profit
|
36.33
|
28.80
|
196.20
|
41.76
|
58.71
|
EPS (Rs)*
|
1.35
|
1.07
|
7.32
|
#
|
#
|
* EPS is annualized on post issue equity
capital of Rs 53.64 crore of face value of Rs 2 each
|
|
|
# EPS is not annualised due to seasonality
of business
|
|
|
|
|
EO: Extraordinary items. EPS is calculated
after excluding EO and relevant tax
|
|
|
|
Figures in Rs crore
|
|
|
|
|
|
Source: Capitaline Corporate Database
|
|
|
|
|
|
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