Jupiter Life Line Hospitals IPO: Grey market premium, peer comparison, analyst views, price band & more

The Rs 869.08 crore initial public offer (IPO) by Jupiter Life Line Hospitals, a multi-specialty tertiary and quaternary healthcare provider, will be opened for subscription today. Ahead of its public issue, the company raised Rs 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.

The IPO would comprise of a fresh issue of 7,374,163 shares worth Rs 542 crore and an offer sale worth Rs 327.08 crore and would be sold in the Rs 695-Rs 735 price band. Potential investors can bid for a minimum of 20 shares and in multiples of 20 shares thereafter.

Peer comparison

Sushil Finance noted that Jupiter Life Line Hospitals' listed peers such as Apollo Hospitals (trading at 84 times EPS) and Fortis Healthcare (40 times) trade at 40-84 times their earnings per share. It said the industry average PE stands at 50 times while Jupiter Life is asking for a PE of 56.75 times on the upper end of the price band over its diluted FY23 EPS of Rs 12.95.

Grey market premium

Jupiter Life Line Hospitals commanded a premium of Rs 218 in the grey market. The grey market premium (GMP) for Jupiter Life Line Hospitals stayed healthy in the Rs 200-218 range in the past couple of days, thanks to recent solid stock listings such as Vishnu Prakash R Punglia (67 per cent listing gain) and Aeroflex Industries (83 per cent). 

Business background

Jupiter Life Line Hospitals is among multi-specialty tertiary and quaternary healthcare providers in the Mumbai Metropolitan Area (MMR) and western region of India with a total bed capacity of 1,194 hospital beds across three hospitals as of March 31. Jupiter Life Line Hospitals currently operates three hospitals in Thane, Pune and Indore under the “Jupiter” brand. It is in the process of developing a multispecialty hospital in Dombivli, Maharashtra, which is being designed to accommodate over 500 beds. The construction of the hospital began in April this year and will be spread across 600,000 square feet, analysts noted. 

Analyst view: Subscribe or skip?

SBI Securities said 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, it said while advising investors to subscribe to the IPO for a long-term investment perspective.

Amid advantage of regional dominance, operational efficiency, Jupiter Hospital has demonstrated the good financial performances among peers, said SMIFS.

"It has the high level ARPOB. Hence, based on current performance, we assign 'Subscribe for listing gains'. At higher price band, Jupiter Hospital is demanding an EV/Ebitda multiple of 22 times, which is at par with peer Yatharth Hospitals (Same size of 3 hospitals). Thus, the IPO is attractively priced," SMIFS said.

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 Rs 64.39 as of March 31. Post the IPO, Jupiter Life Line Hospitals will be a debt free company, said Reliance Securities, adding that the growth in healthcare segment, good patient volumes, cost efficiency, strong financials, and expansion to new areas will drive the company’s performance going forward.

The brokerage has a 'Subscribe' rating on the stock from the long term perspective.

"At the IPO price of Rs 735 (upper price band), JLHL is valued at P/E of 59.9 times. Considering the growth opportunities in the company and strong fundamentals, we recommend a Subscribe rating," said Ventura Securities.

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