GPT Healthcare IPO sail through on last day of bidding; NIIs portion booked 3.3x

The initial public offering (IPO) of GPT Healthcare continued to see a decent response from the investors during the third and final day of the bidding process. The issue was subscribed 37 per cent on the first day of the bidding, while ended day two with 85 per cent subscription.

The Kolkata-based GPT Healthcare is selling its shares in the price band of Rs 177-186 apiece with a lot size of 80 shares and its multiples thereafter. It is looking to raise Rs 525.14 crore via IPO, which includes a fesh share sale of Rs 40 crore and offer-for-sale (OFS) of up to 2.60 crore equity shares by BanyanTree Growth Capital II.

According to the data, the investors made bids for 4,58,30,080 equity shares, or 2.32 times, compared to the 1,97,63,327 equity shares offered for the subscription by 1.25 pm on Monday, February 26. The three-day bidding for the issue, which began on Thursday, shall conclude today, that is, Monday.

The portion reserved for non-institutional investors saw a subscription of 3.32 times, while the allocation for retail investors was subscribed 1.84 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 2.46 times for the allocation as of the same time.

Kolkata-based GPT Healthcare, which was incorporated in 1989, operates a chain of mid-sized, multi-specialty, full-service hospitals in Eastern India under the ILS Hospitals brand, providing integrated healthcare services focusing on secondary and tertiary care. It has four hospitals of which two are located in Kolkata, one in Howrah and one in Agartala (Tripura).

The grey market premium (GMP) of GTL Healthcare has taken a big hit as the company is commanding a premium of merely Rs 7-10 in the unofficial market. However, there was no premium in the grey market earlier, since the issue was announced. It has seen a highest GMP of Rs 19.

Analysts have majorly suggested to subscribe to the issue for the long term citing its strong foothold in the dense Eastern market, strong operational performance, sound track record and decent financials. However, others have suggested to skip the issue citing its rich valuations, concentration of revenue, lower bed occupancy and attrition of healthcare professionals.

GPT Healthcare is focused on mid-sized hospitals to get the overall efficiency that results in improved Return on Capital. It announced greenfield expansion in Raipur and Ranchi is expected to drive the overall business growth over the long term where the company's bed capacity is expected to increase from 561 as on September 2023 to 853 by September 2026, said Nirmal Bang Securities.

It will be a debt free company post reduction of overall borrowings by Rs 30 crore through its funding from fresh issues. Its topline has grown at a CAGR of 19 per cent and Ebit has grown at a CAGR of 28 per cent between FY20-23. ROE and ROCE stood at healthy, which are broadly in line with average performance of listed peers, it added with a 'subscribe for long term' rating.

Ahead of its IPO, GPT Healthcare has allocated 84,69,996 equity shares at Rs 186 apiece to garnered Rs 157.54 crore from anchor investors. The company has reserved 50 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 35 per cent allocated to retail investors.

If we attribute FY24 earnings to the company's post-IPO equity capital, the asking price at the upper price band is at a P/E of 31.7 times. The company is yet to expand its operations successfully to other parts of India. The bed occupancy rates need to improve to reflect better in the financial performance, said StoxBox which has an 'avoid' rating on the issue.

"The company intends to strengthen its existing hospitals by further balancing specialty mix, deepening its expertise in selective specialties and adding new specialties and services. On the valuation front, we believe that the company is fairly priced," said Anand Rathi Research with a 'subscribe for long term' rating.

JM Financial is the book running lead manager of the GPT Healthcare IPO, while Link Intime India is the registrar for the issue. Shares of the company are set to be listed at both BSE and NSE with Friday, February 29 as the tentative date of listing of the shares.

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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