The ₹869.08 crore initial public offer (IPO) by Jupiter Life Line Hospitals, a multi-specialty tertiary and quaternary healthcare provider, opened for subscription today, September 6, and will close on September 8. The company has fixed the price band in the range of ₹695- ₹735 per share for the issue.
About the issue: The IPO comprises of a fresh issue of 73.74 lakh shares worth ₹542 crore and an offer sale of 44.5 lakh equity shares by promoter group entities and other shareholders worth ₹327.08 crore.
Objective: The company is going to utilise net fresh issue proceeds mainly for debt reduction worth ₹510.4 crore, and the remaining for general corporate purposes.
Subscription status: The issue received a decent response from investors. At 1:45 pm on its first day of bidding, the IPO was subscribed 39 percent against its offer. It has received bids for 32.97 lakh shares against 83.55 lakh shares on offer. The category for retail investors was bid the most, 60 percent, followed by that of non-institutional investors (NII), which was subscribed to 45 percent. However, the qualified institutional buyers (QIBs) portion has not received any bids till now.
Grey market premium: Shares are commanding a premium of ₹276 apiece in the grey market today, indicating a strong listing at over 37 percent premium.
However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.
Lot size: Potential investors can bid for a minimum of 20 shares and in multiples of 20 shares thereafter. Hence, one lot will cost investors ₹14,700.
Reservation: Up to 50 percent of the offer size is reserved for qualified institutional buyers. The remaining 15 percent is for high-networth individuals (non-institutional investors) and 35 percent for retail investors.
Anchor investors: Ahead of its public issue, the company raised ₹260.72 crore from anchor investors, including Abu Dhabi Investment Authority, Goldman Sachs, Nomura Funds, Government of Singapore, HSBC Global and Fidelity Funds, among others.
About the firm: Incorporated in 2002, Jupiter Lifeline Hospital Limited (JLHL) is a key multi-specialty tertiary and quaternary healthcare provider in the Mumbai Metropolitan Area (MMR) and western region of India. As on March 2023, it has a total capacity of 1,194 hospital beds across three hospitals that operate under the ‘Jupiter’ brand in Thane, Pune and Indore with 1,306 doctors. Also, the hospitals are equipped with over 30 key specialties in order to simplify the process of delivery of healthcare.
The company is also expanding its presence in developing a multi-specialty hospital in Dombivli, Maharashtra, which is designed to accommodate over 500 beds and has commenced construction in April 2023.
Financials: For the financial year FY23, the company's net profit rose 42.6 percent to ₹72.9 crore while its revenue from operations grew 21.7 percent to ₹892.5 crore. Meanwhile, its EBITDA (earnings before interest, tax, depreciation and amortisation) also jumped 31.2 percent to ₹201.3 crore during the same period and its EBITDA margin expanded by 163 bps YoY to 22.55 percent in FY23.
Peers: Jupiter Hospitals compares itself with listed entities like Apollo Hospitals Enterprise, Fortis Healthcare, Narayana Hrudayalaya, Global Health, Krishna Institute of Medical Sciences, and Max Healthcare Institute.
Book-running managers: ICICI Securities, Nuvama Wealth Management, and JM Financial are the book-running lead managers to the issue. KFin Technologies is the registrar.
Important dates: The company will fix the basis of IPO allotment on September 13 and initiate refunds on September 14, while the credit of shares to the Demat account of eligible allottees will take place on September 15.
Jupiter Life Line Hospitals shares are likely to be listed on September 18 on stock exchanges BSE and NSE.
What brokerages say:
Brokerages recommend subscribing to the issue on the back of fair valuations, decent return ratios and margins, and favourable risk-reward ratio. Also, the advantage of regional dominance and operational efficiency are some other key positives for the IPO. Let's see what brokerages have to say:
Nirmal Bang: Subscribe
JLHL has mainly focused on catering to middle and upper-middle-class households where it observes the working class segment with organised sector that supports high possession of medical insurance. JLHL has delivered healthy financials with 24.5 percent revenue growth and 34.6 percent EBITDA growth between FY20 and 23. Overall EBITDA margin has also improved from 17.8 percent in FY20 to 22.6 percent in FY23. ROE and ROCE stood at healthy levels of 20.1 percent and 20.5 percent in FY23 which are largely in line with the average performance of listed peers. The issue is valued at a reasonable valuation of 22.4x FY23 EV/EBITDA compared to 30.4x FY23 average EV/EBITDA of listed peers. Thus, we recommend ‘SUBSCRIBE’ to the issue.
SBI Securities: Subscribe
The company is valued at an FY23 PE multiple of 66.1x, EV/Bed of ₹4.8 cr, and EV/EBITDA of 22.9x, at the upper price band on post-issue capital. The IPO looks fairly valued across various valuation parameters when compared with its peers. With decent return ratios and margins, the risk-reward ratio for long-term investors looks favourable. The investors can subscribe to the IPO from a long-term investment perspective.
Amid the advantage of regional dominance, and operational efficiency, Jupiter Hospital has demonstrated good financial performance among peers. It has a high-level ARPOB. Hence, based on current performance, we assign 'Subscribe for listing gains'. At a higher price band, Jupiter Hospital is demanding an EV/EBITDA multiple of 22 times, which is at par with peer Yatharth Hospitals (Same size as 3 hospitals). Thus, the IPO is attractively priced.
Reliance Securities: Subscribe
At the upper limit of the price band, the issue is asking for a price to book of 11.41 based on its NAV of ₹64.39 as of March 31. Post the IPO, Jupiter Life Line Hospitals will be a debt-free company and the growth in the healthcare segment, good patient volumes, cost efficiency, strong financials, and expansion to new areas will drive the company’s performance going forward, hence, we recommend to “SUBSCRIBE” the issue from the long term perspective.
At the IPO price of ₹735 (upper price band), JLHL is valued at a P/E of 59.9 times. Considering the growth opportunities in the company and strong fundamentals, we recommend a ‘Subscribe’ rating.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.