Medanta-owner Global Health trades firm after debuting at 19% premium

Global Health, which operates hospitals under Medanta brand, made a strong debut on the bourses with its shares listed at Rs 401 on the National Stock Exchange (NSE), a premium of 19 per cent against the issue price of Rs 336 per share. The stock kicked-off trade at Rs 398.15, on the BSE.

At 10:13 am, Global Health traded at Rs 401.65, a 20 per cent premium to its issue price on the NSE and BSE. So far in the day, the stock hit a low of Rs 393. The counter has seen huge volumes with a combined 26 million shares changing hands on the NSE and BSE.

Founded by renowned cardiovascular and cardiothoracic surgeon Dr Naresh Trehan, Global Health is one of the largest private multispeciality tertiary care providers operating in the north and east regions of India. Under the ‘Medanta brand’, it operates five hospitals in five cities.

The Rs 2,206 crore initial public offering (IPO) of Global Health had sailed through on strong demand from qualified institutional buyers (QIBs) and high networth investors (HNIs). The quota for retail bidders was subscribed 0.88 times only, whereas the portion for non-institutional investors was subscribed 4.02 times and of QIBs by 28.64 times.

Medanta provides healthcare services in over 30 medical specialties and engages over 1,300 doctors led by experienced department heads and, spanning an area of 4.7 million sq ft, Medanta’s operational hospitals have 2,467 installed beds.

As per Crisil Research estimates, the Indian healthcare delivery market, which mainly comprises hospitals, is expected to reach around Rs 5.5-5.7 trillion in value terms by end of FY23, with growth being contributed by stabilisation of regular treatments, surgeries and OPD amid minimisation of disruption due to the pandemic and expansion of average revenue per occupied bed (ARPOB) for the sector. A potential upside is also expected from picking up of high realisation medical tourism as international travel restrictions are relaxed.

Medanta has demonstrated sturdy financial performance over the last three fiscals and weathered the challenges of Covid-19. Since FY20, it has focused on managing operational efficiency and cost base and has been able to secure reductions in our operating costs by reducing employee benefit expense to revenue ratios from 35.91 per cent in FY20 to 32.23 per cent in FY21 and 26.21 per cent in FY22, and from 27.37 per cent in the three months ended June 30, 2021 to 25.20 per cent in the three months ended June 30, 2022.

Global Health has good operating metrics and financial profile with topline and margin increasing over years. When compared to its listed peers, Medanta is fairly valued, said Anand Rathi Share and Stock Brokers in IPO note.