IPO Alert: Medanta hospital chain files papers for public listing

The hospital industry in India is forecasted to grow to ₹8.6 trillion by 2022 from ₹4 trillion in 2017, at a CAGR of 16–17%.

The Indian healthcare delivery market is expected to reach approximately ₹5 trillion in value by the end of fiscal 2022. The in-patient department is estimated to account for nearly 70% of the total healthcare delivery market, while the out-patient department caters to the rest of it.

Global Health Ltd, which operates and manages hospitals under the Medanta brand, recently filed a draft red herring prospectus with the Securities and Exchange Board of India to raise funds via an initial public offering.

The IPO consists of a fresh issue of shares aggregating up to ₹5 billion and an offer for sale of up to 48.44 million shares by the company’s promoters and shareholders.

Global Health intends to utilize ₹3.75 billion of the net proceeds towards repayment of borrowings by its subsidiaries Global Health Patliputra Pvt. Ltd and Medanta Holdings Pvt. Ltd. The remainder of the amount will be utilized for general corporate purposes.

Multi-specialty Care

Global Health is one of the largest privately held multi-speciality tertiary care providers, operating in the North and East regions of India. Medanta specializes in cardiology/cardiac science, neurosciences, oncology, digestive/hepatobiliary sciences, orthopaedics, liver transplant, and kidney/urology.

The Gurugram-based hospital chain was founded by Dr Naresh Trehan, a world-renowned cardiovascular and cardiothoracic surgeon. He was awarded the Padma Bhushan and the Padma Shri by the Indian Government.

At the end of March 2021, hospitals under Global Health had a total area of 3.7 million square feet and 2,176 installed beds. Its Patna and Noida hospitals are expected to commence operation in fiscal 2022 and fiscal 2025 respectively, taking the number of installed beds up to more than 3,500.

Key Figures

In fiscal 2021, the company’s total revenues stood at ₹14.78 billion, against ₹15.44 billion a year ago. Net profit for the year was ₹288 million, versus ₹363 million last year.

The relatively high costs in healthcare services, such as those related to manpower, infrastructure maintenance and medical equipment, might weigh on the company’s profitability if they are not passed on to customers.