GPT Healthcare IPO off to slow start; GMP remains flat: Check details

As of 3 pm, GPT Healthcare IPO was subscribed 30 per cent, led by retail investors, whose portion was subscribed over 50 per cent

Kolkata based GPT Healthcare, that runs ILS Hospitals, saw a slow start to its IPO subscription on the first day of the issue on Thursday, Feb 22. 

As of 3 pm, the issue was subscribed 30 per cent, led by retail investors, whose portion was subscribed over 50 per cent. NII portion had been subscribed 12 per cent, while the QIB portion received less than 1 per cent of bids against its reserved category. 

The grey market premium was zero for the stock in the unlisted market, as per ipowatch.in, signaling muted demand for the public offer. 

The price band for the IPO is set at Rs 177-188. The subscription window is open till February 26 and the stock will likely list on February 29.

At the upper band, the IPO size is of Rs 525 crore with Rs 40 crore to be raised from fresh issue and the remaining from an offer for sale (OFS).

Proceeds from the IPO will be used to pay down debt and fund expansion plans in Raipur and Ranchi. The company will be debt free post reduction of overall borrowings by Rs 30 cr through the fresh issue proceeds.

GPT Healthcare operates a chain of mid-sized full-service hospitals with a focus on secondary and tertiary care.

Analysts at Anand Rathi Brokers recommended subscribing to the issue for the long term given its fair valuation and its plan to balance its specialty mix and deepen its expertise in selective specialties. 

"At the upper price band company is valuing at P/E of 39.1x with a post issue market cap of Rs 15,262 million and return on net worth of 23.7 per cent in FY23. We believe that the company is fairly priced," they said. 

Those at Nirmal Bang said that its announced greenfield expansion in Raipur and Ranchi is expected to drive the overall business growth over the long term where its bed capacity will likely rise from 561 as on Sep 2023 to 853 by FY26.

It has a strong positioning in underserved and populous healthcare delivery markets with strategically located 'right-sized' hospitals resulting in high return on capital. Plan to expand to widen its presence in Eastern India is also positive," they said while giving a subscribe rating to the issue. 

As per the red herring prospectus, the company's listed peers are Global Health (with a PE of 90.29), Krishna Institute of Medical Sciences (PE at 49.51), Jupiter Life Line (PE at 81.73), Yatharth Hospital (with PE of 37.66), Kovai Medical Center (PE of 29.93) and Shalby Ltd (PE of 49).

On the financial front, for FY23, the company’s profit after tax (PAT) dropped by 6.4 per cent sto Rs 39 crore compared to Rs 41.66 crore FY22 while its revenue from operations climbed by 7 per cent to Rs 361 crore. 

GPT Healthcare has reported a Compound Annual Growth Rate (CAGR) of 22 per cent  in revenue growth during FY21-23. 

The company's expansion plans include two new hospitals in Raipur and Ranchi, with a combined capacity of 330 beds.

Additionally, GPT Healthcare is looking to acquire hospitals in Patna, Jamshedpur, and Bhubaneshwar to further strengthen its presence in Eastern India. 

JM Financial is the book running lead manager of the company, while Link Intime India Private is the registrar for the issue.

As of fiscal 2023, the company operates three full-service hospitals in West Bengal (Dumdum, Salt Lake, and Hawra) and an additional hospital in Agartala, Tripura, under the ILS brand, boasting a total capacity of 561 beds.