IPO: Yatharth Hospital and Trauma Care Services

In a nutshell Quality : Yatharth Hospital's three-year average ROE and ROCE are 32.9 per cent and 22.5 per cent, respectively. It has also maintained a healthy operating margin of over 20 per cent in each of the last three years. Growth : In the last three years, Yatharth Hospital grew its topline and PAT by 50.8 per cent and 90.3 per cent per annum, respectively. Higher footfalls and its ability to treat various speciality needs are expected to be the key growth drivers. Valuation : The stock will be priced lower than its peers in terms of P/E and P/B. Overview : The Indian healthcare industry is improving rapidly, which should drive growth ahead. It also has a proven track record in various speciality segments. However, failing to adapt to evolving technology, unfavourable regulatory changes and running up its debt might prove fatal. About Yatharth Hospital Yatharth Hospital offers a range of healthcare services across 30 specialties and operates three multi-speciality hospitals in Noida. Its recently-acquired hospital in Orchha, Madhya Pradesh, commenced operations in April 2022. Strengths of Yatharth Hospital Two of Yatharth's hospitals are among the top 10 (eighth and tenth) private hospitals in Delhi-NCR (in terms of number of beds). It witnessed steady growth in average revenue per occupied bed and occupancy rate over the last three years. Moreover, the in-patient volume more than doubled from 21,356 in FY21 to 45,358 in FY23. Weaknesses of Yatharth Hospital The nature of the hospital business makes Yatharth Hospital highly dependent on skilled medical professionals. Thus, its financials are sensitive to attrition rates . In FY23, it reported an attrition rate of 47 per cent among doctors and 74 per cent among nurses. The healthcare segment is highly competitive . In addition, a huge chunk of the big players operates from the same geography (Delhi-NCR). The healthcare industry operates under tight regulatory oversight . IPO details Total IPO size (₹ cr) 687 Offer for sale (₹ cr) 197 Fresh issue (₹ cr) 490 Price band (₹) 285-300 Subscription dates July 26-28, 2023 Purpose of issue To repay debt and fund capex & acquisitions Post IPO M-cap (₹ cr) 2576 Net worth (₹ cr) 673 Promoter holding (%) 66.3 Price/earnings ratio (P/E) 39.2 Price/book ratio (P/B) 3.8 Financial history Key financials 2Y growth (% pa) FY23 FY22 FY21 Revenue (₹ cr)