IPO: Medi Assist Healthcare

Medi Assist Healthcare, a third-party administration (TPA) services provider for insurance and healthcare, launched its IPO (initial public offering) on January 15, 2023. Here's an overview of its business, strengths, weaknesses, and growth prospects. In a nutshell Quality : Its three-year average return on equity (ROE) and return on capital employed (ROCE) are 23.7 and 18.0 per cent, respectively. In FY23, its ROE and ROCE were 27.4 and 20.8 per cent, respectively. Growth : Its topline grew by 28.2 per cent and 22 per cent in FY23 and FY22, respectively. Valuation : The stock is valued at a P/E and P/B of 48.9 and 6.9 times, respectively. There are no listed peers currently. Overview : Increasing insurance penetration in India is expected to drive growth. However, insurers may decide to establish their in-house services in future, posing a significant risk to its operations. Also, the highly regulated nature of the insurance industry is monitorable. About Medi Assist Healthcare Incorporated in 2000, Medi Assist Healthcare is a third-party administration services provider to hospitals and insurance companies. Simply, it acts as an intermediary between hospitals, insurers and their customers. It helps process claims on behalf of insurers and provides other services such as policy administration, customer service, etc. Similarly, it provides hospitalisation services, call centre services, billing services, etc., to hospitals. Strengths of Medi Assist Healthcare Market leader in third-party administration services, with a market share of 26.4 per cent in FY23. Strong pan-India network. It caters to 18,754 hospitals across 1,069 cities. Weaknesses of Medi Assist Healthcare Revenue concentration : Its top five largest customers accounted for 71 per cent of FY23 revenue. It operates in a highly regulated industry and is considerably dependent on insurance companies. Any changes in the preferences or decisions of insurance providers can significantly impact its topline. IPO details Total IPO size (Rs cr) 1172 Offer for sale (Rs cr) 1172 Fresh issue (Rs cr) 0 Price band (Rs) 397-418 Subscription dates Jan 15-17,2024 Purpose of issue Offer for sale Post-IPO M-cap (Rs cr) 2878 Net worth (Rs cr) 417 Promoter holding (%) 45.8 Price/earnings ratio (P/E) 48.9 Price/book ratio (P/B) 6.9 Financial history Key financials 2Y growth (% pa) TTM Sept 2023 FY23 FY22 FY21 Revenue (Rs cr) 25 563 505 394 323 EBIT (Rs cr) 45.4 90 93