GPT Healthcare
IPO Size: Rs. 525 cr
- Rs. 485 cr offer for sale (OFS) by PE investor Banyan Tree, making a complete exit at 31% IRR in over 9 years
- Rs. 40 cr fresh issue for Rs. 30 cr debt repayment (Rs. 44 cr net debt)
Price band: Rs.177-186 per share
M cap: Rs. 1,526 cr, implying 34% dilution
IPO Date: Thu 22nd Feb to Mon 26th Feb 2024, Listing Thu 29th Feb 2024
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
4 Hospitals in East India
GPT Healthcare, part of Kolkata based GPT Group, with GPT Infraprojects a listed company, owns and operates 561 beds across 4 hospitals – 3 in West Bengal, 1 in Tripura, under brand name ‘ILS Hospitals’. It is adding 152 beds in Raipur by 2025 and 140 beds in Ranchi by 2026, both under asset-light model, entailing a total investment of just Rs. 105 cr from its end.
Low Occupancy Drags Margin
Company’s average revenue per operating bed (ARPOB) stood at Rs.33,000, which is in line with regional peers like Yathartha and KIMS. However, bed occupancy is lower at 59-60%, as 116 bed Howrah hospital, started in 2019, is yet to mature - 46% occupancy currently and even company’s largest hospital - 205 beds at Agartala - clocked only 53% occupancy in H1FY24. Due to this, EBITDA margin is 22%, the lowest among peers, which average is at 27-28%.
Revenue stood at Rs. 361 cr in FY23, which rose 19% YoY to Rs. 204 cr in H1FY24. EBITDA margin was maintained at 22% in H1FY24, with net margin of 11% on Rs. 23 cr PAT.
Peers Ruling Much Higher
GPT Healthcare Enterprise value (EV) per bed is at Rs. 2.7 cr, with EV/EBITDA multiple, on FY24E basis, of 16x, which is seen attractive, based on peer comparison:
- 1,405 bed Yatharth Hospital clocked ARPOB of Rs. 28,300 for 9MFY24, with 54% occupancy and 27% EBITDA margin, is trading at EV/bed of Rs. 2.7 cr and 22.5x EV/EBITDA multiple.
- South-based hospital chain KIMS has 3,975 bed capacity, with 73% occupancy, Rs.31,400 ARPOB, 27% EBITDA margin and an EV of Rs. 18,700 cr, resulting in an EV/bed of Rs. 4.7 cr and EV/EBIDA multiple of 28x.
- Kovai Medical has a larger bed capacity of 2,097 beds, but clocks ARPOB of only Rs. 17,400, down 17% YoY, with 55% occupancy in FY23 and 18% RoE. Kovai’s EV/EBITDA of 14x and EV/bed at Rs. 2.2 cr, makes GPT attractive, as it has 27% RoE on H1FY24 annualised basis.
- Mumbai based 1,194 bed capacity Jupiter Life has much higher ARPOB of Rs.53,600 and better occupancy of 63%, with 23% EBITDA margin. Jupiter is valued at Rs.7.8 cr per bed and an EBITDA multiple of 38x.
22nd Feb 2024 at 11:06 am