About the Company

‘Yatharth Hospital and Trauma Care Services Limited’ was incorporated in Delhi on 28th February 2008 as a super specialty hospital chain.

The company currently operates three super specialty hospitals located at Noida, Greater Noida, and Noida Extension, Uttar Pradesh. The hospitals at Noida Extension and Greater Noida have been ranked 8th and 10th respectively in the largest private hospitals in the Delhi NCR by CRISIL.

The company’s first hospital in Greater Noida has a capacity of 400 beds, including 112 critical care beds, and 9 operation theatres, and contributed to 38.32% of the revenue from operations for FY 2022-23.

The second hospital in Noida has a capacity of 250 beds, 4 operation theatres, and 81 critical care beds with a contribution of 33.08% to the revenue from operation for FY 2022-23. The third hospital located in Noida Extension, Uttar Pradesh has 450 beds, including 125 critical care beds and 11 operation theatres with a revenue share of 26.07% for the FY 2022-23.

In addition to this, the company has recently acquired a 305 bedded hospital at Jhansi-Orchha. This hospital is equipped with 11 operation theatres and 76 critical beds, contributing 2.52% to revenue from operations for FY 2022-23.

As of March 31, 2023, the company has engaged 609 doctors and offers healthcare services across several specialties and super specialties such as Medicine, Cardiology, Neurosciences, General Surgery, Nephrology & Urology, Paediatrics, Gastroenterology, Pulmonology, Gynaecology, Orthopaedics & Spine & Rheumatology.

The revenue mix of these services is as below:-

Industry Analysis

Breaching pre-Covid level in FY 2021-22, CRISIL estimates the Indian healthcare delivery industry to post healthy CAGR of approximately 11.3% between Fiscals 2023 and 2027, driven by long term structural factors, strong fundamentals, increasing affordability and potential of the Ayushman Bharat scheme. With long term structural factors supporting growth, renewed impetus from PMJAY and government focus shifting onto healthcare sector, the healthcare delivery market is expected reach Rs.8.6 trillion in Fiscal 2026-27 from Rs.5.6 trillion in FY 2022-23.Thus, Indian healthcare delivery market is poised for robust growth in the medium term.

In India, healthcare services are provided by the government and private players. However, the provision of healthcare services in India is skewed towards the private players. The share of treatments (in value terms) by the private players is expected to increase from 62% in FY 2016-17 to nearly 73% in Fiscal 2026-27. The skew is more towards the private players owing to the expansion plans of private players being centred on it, further buttressed by increasing reliance on private facilities. Thus, Private hospitals make up approximately 60% of the market by value, out of which large chains make up approximately 12 to 14%, in which the company is operating.

IPO Objectives

1. Repayment/prepayment, in full or part, of certain borrowings availed by the Company.

2. Repayment/prepayment, in full or part, of certain borrowings availed by the subsidiaries, namely, AKS Medical & Research Centre Private Limited (“AKS”) and Ramraja Multispeciality Hospital & Trauma Centre Private Limited (“Ramraja”).

3. Funding capital expenditure expenses of the company for two hospitals, namely, Noida Hospital and Greater Noida Hospital.

4. Funding capital expenditure expenses of the subsidiaries, AKS and Ramraja, for respective hospitals operated by them.

5. Funding inorganic growth initiatives through acquisitions and other strategic initiatives.

6. General Corporate purposes.

Financials

Over the period from FY 2020-21 to FY 2022-23, the company achieved growth in its revenue and net profit, with a CAGR of 50.84% and 83.23% respectively and the company's net profit margin improved from 8.57% to 12.64%.. EBITDA, a measure of profitability, also saw growth at a rate of about 30.29%. However, the EBITDA margin declined from 29.30% in FY 2020-21 to 25.71% in FY 2022-23. The ROCE and the ROE showed positive improvements from 18.43% and 25.06% respectively to 26.10% and 35.95% for the above-mentioned period.

Peer Comparison

The company is operating in the healthcare delivery segment and its listed peers are as follows:-

From the above table, we can see that Apollo Hospitals and Fortis Healthcare are the biggest players in the industry based on their revenue. Yatharth Hospital, in comparison, is smaller in terms of revenue. However, Yatharth Hospital stands out with the highest EBITDA Margin and RONW in the industry, indicating efficient financial management and better returns on investments. Its EPS is also higher than Fortis Healthcare Limited and Healthcare Global Enterprises Limited, showing stronger profitability per share. Moreover, Yatharth Hospital has the lowest PE ratio among its peers.

Valuation

The company's PE ratio is 29.73, while the industry's PE ratio is 66.07, indicating undervaluation of the issue price. On the other hand, the company's PB ratio is 10.74, and the industry's PB ratio is 7.64, suggesting overvaluation of the issue price.

Key Risks

1. Significant portion of Net Proceeds from the Fresh Issue is earmarked for Jhansi-Orchha Hospital, which was non-operational since Fiscal 2020 until Fiscal 2022 and incurred losses in Fiscal 2023.

2. Price restrictions by the Government in certain instances such as during COVID-19 could adversely affect the business, results of operations and cash flows of the company.

3. Operations of the company are concentrated in the Delhi NCR region whereas it’s peers Apollo Hospitals and Fortis Healthcare have presence in the entire country.

IPO Details

1. The Initial Public Offering (IPO) will be available for subscription from 26th July 2023 to 28th July 2023.

2. The price range for the IPO is set at Rs. 285 to Rs. 300 per share.

3. The IPO is a fresh issue aggregating up to Rs.490 crores and 65,51,690 shares are offered for sale.

4. Retail individual investors can apply for a minimum of 1 lot, which consists of 50 shares, amounting to Rs. 15,000 and a maximum of 13 lots, totalling 650 shares, with a maximum investment of Rs. 195,000.

5. The Grey Market Premium (GMP) for this IPO stands at 18.33% as of the time of writing this blog.