IKS Health IPO analysis

IKS Health IPO (initial public offering) will open for subscription on December 12, 2024, and close on December 16, 2024. We breakdown the strengths, weaknesses and growth prospects of the tech-based healthcare service provider to help investors make an informed decision. IKS Health IPO in a nutshell Quality: During FY22-24, Inventurus Knowledge Solutions or IKS Health reported a three-year average ROE and ROCE of 38 and 33 per cent, respectively. Growth: During FY22-24, its revenue and net profit grew by around 54 and 26 per cent per annum, respectively. Valuation: At the upper end of the price band, the stock is valued at a P/E and P/B ratio of 61 and 16.6 times, respectively. Overview: The company operates a tech platform for healthcare companies to help them manage administrative tasks. Growing healthcare expenditure in the US, where the company primarily operates, will help it scale up its business. However, the business has low entry barriers, which is a key risk. About IKS Health Inventurus Knowledge Solutions (IKS Health) offers a tech platform to healthcare enterprises in the US, Canada and Australia that handles their administrative tasks like clinical documentation, patient engagement, and revenue cycle management. This allows healthcare companies to focus on their core operations and work efficiently, saving resources on ancillary tasks like paperwork. As of September 30, 2024, the company had 778 healthcare companies in the US as its clients. About 96 per cent of its revenue comes from the US. Strengths of IKS Health Strong client relationships: IKS Health has a strong track record of generating revenue from repeat clients. In the last three financial years (FY22-24), over 98 per cent of revenue was generated by existing clients. Weaknesses of IKS Health Client concentration: Although IKS works with 778 clients in the US, a significant portion of its revenue is generated from a handful of them. The top 10 clients accounted for 68 per cent of its revenue in H1 FY25. Losing any of its major clients can be fatal for the business. IKS Health IPO details Total IPO size (Rs cr) 2,498 Offer for sale (Rs cr) 2,498 Fresh issue (Rs cr) - Price band (Rs) 1,265-1,329 Subscription dates December 12-16, 2024 Purpose of issue The issue is entirely an offer-for-sale Post-IPO M-cap (Rs cr) 22,802 Net worth (Rs cr) 1,377 Promoter holding (%) 69 Price/earnings ratio (P/E) 61 Price/book ratio (P/B) 16.6 Financial history Key financials 2Y annual growth (%) TTM FY24 FY23 FY22 Revenue (Rs cr) 54.3 2,470 1,818 1,031 764 EBIT (Rs cr) 40.4 544 462 305 234 PAT (Rs cr) 26.1