Shares of Yatharth Hospital and Trauma Care Services made a muted debut on Dalal Street on Monday, August 7, against stellar expectations of the Street. However, later in the day, the stock recovered from the initial disappointment and witnessed follow-up buying in its debut trading session.
The stock was listed at ₹306.10, a premium of 2 percent, against its issue price of ₹300 per share on NSE on Monday. However, it jumped over 11 percent to settle at ₹333.75. Today as well, the stock gained as much as 7.2 percent to its record high of ₹357.85.
According to market experts, the ongoing volatility in the secondary market put a dent in investor sentiment for fresh listings.
Yatharth Hospital raised around ₹687 crore from its initial public offering (IPO), which was open for bidding between July 26 and July 28 in the price range of ₹285-300 apiece.
The issue had gathered a decent response from the investors and was subscribed to 37.28 times during the three-day bidding. The portion reserved for qualified institutional bidders (QIBs) was booked 86.37 times, while the non-institutional investors (NIIs) quota was subscribed 38.62 times and the retail investors' part was booked 8.66 times.
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart, believes that the ongoing volatility in the secondary market has impacted the Yatharth Hospital's IPO listing, which was well below expectations, given the strong subscription rate that the IPO received earlier.
"Post listing the IPO is trading at ₹333 per share, a premium of around 10 percent over the issue price. Investors who are looking for short-term gains may book profits at this level. However, aggressive investors who believe in the long-term prospects of the company may hold the stock with a stop loss at around the issue price," she advised.
Meanwhile, Vinit Bolinjkar, Head of Research, Ventura Securities, recommends investors to sell the stock.
"Occupancy has been low in Noida extension from the last 3 years (around 30-35 percent) and Jhansi (commenced in April 2022 and had occupancy of 8 percent). Concentrated in the Noida region where the competition is very extensive Noida Hospital is running at 88 percent capacity but doesn’t have a land bank but the Noida extension running low on capacity has a huge land bank and the company is doing a capex at an under utilized hospital. Company is highly leveraged, has D/E of 1.44," he explained.
Incorporated in 2008, Yatharth Hospital is a multi-care hospital chain that operates four-super specialty hospitals located in Noida, Greater Noida, and Noida Extension. They rank among the top 10 largest private hospitals in the National Capital Region of Delhi.
To extend its operations and services, the company acquired a 305-bedded multi-specialty hospital in Orchha, Madhya Pradesh. This too is among the largest hospitals in the locality. A team of 370 doctors is engaged with the company. They offer healthcare services across numerous specialties and super specialties.
The company's revenue from operations grew at a CAGR of 51 percent over FY21-FY23 from ₹229 crore to ₹520 crore in FY23 led by a rise in in-patient volumes (46 percent CAGR over the same period), bed occupancy levels and an increase in average revenue per occupied bed.
Its EBITDA grew at 41 percent CAGR over FY21-23 and maintained a stable EBITDA margin of 27.6 percent (3-yr Average) over the same period, led by better operational efficiencies. The RoE also remained healthy at 33.6 percent over FY21-23.
