Jupiter Life Line Hospitals Ltd IPO
Published by Sharekhan Education | September 6, 2023
By Amit Pathak | Sharekhan Education
Jupiter Life Line Hospitals Ltd IPO has an Issue Size of ₹869 Crores and Price Band: ₹695-735. The issue opens on Wednesday, 6th September 2023 and closes on Friday, 8th September 2023.
Company Overview
Jupiter Life Line Hospitals is a prominent private hospital chain in Mumbai Metropolitan Area (MMR) and western India. As of March 31, 2023, the company boasts a robust bed capacity of 1,194 hospital beds. These hospitals are equipped with over 30 specialties, including organ transplant, oncology, orthopedics, cardiology, pediatrics, and neurosurgery. Their hospitals offer full healthcare services, each with NABH certification, covering diagnostics, surgery, and rehabilitation.
Objectives of the Issue
The IPO includes ₹615 crores in fresh equity shares and up to ₹254 crores through an offer for sale (OFS). The company will direct funds from the fresh issue towards repaying borrowings. The minimum application requirement is 20 shares, with multiples thereafter. After allotment, both BSE and NSE will list the shares.
Industry Insight
According to CRISIL Research, the Indian healthcare delivery industry is poised to grow at a remarkable 15-17% CAGR between FY22-25. Growth is fueled by lifestyle ailments, medical tourism, rising incomes, and government initiatives like Ayushman Bharat. The sector saw recent consolidation, empowering larger hospital brands with financial discipline and better bargaining power. Private equity investments are also gaining momentum, with a substantial focus on consolidating hospital portfolios.
Competitive Advantages
Jupiter Life Line Hospitals Ltd. has built a strong reputation for clinical and operational expertise, primarily through word-of-mouth marketing. Their patient-centric multi-specialty approach has positioned them as leaders in tertiary and quaternary care. Their enduring presence in western India, investment in advanced medical technology and equipment, and dedication to teaching and research have attracted and retained highly skilled healthcare professionals, including doctors and nurses.
Business Strategy
The company is currently in the process of establishing a quaternary care hospital in Dombivli, Maharashtra, covering an expansive area of 600,000 sq. feet. They intend to continue investing in academics and research to facilitate further growth and continuous skill enhancement for their healthcare professionals. Additionally, they aim to leverage their experience to identify, execute, and integrate new inorganic opportunities that may arise in the future.
Key Concerns
Jupiter Life Line Hospitals Ltd. operates within a heavily regulated industry, necessitating numerous approvals and licenses from government and regulatory bodies. Failure to obtain or renew these approvals in a timely manner could adversely impact the company’s business operations and cash flow. Furthermore, operating in an industry with high fixed costs, the inability to secure favorable pricing on medical consumables, drugs, and surgical instruments from suppliers or pass on cost increases to patients could significantly affect profitability. It’s worth noting that the company’s bed occupancy rate is lower than the majority of their listed peers.
Financial Performance
Over the period of FY21-23, the company has demonstrated impressive operating revenue growth, achieving a CAGR of 35.5%. EBITDA has also seen substantial growth, with a CAGR of 72.3% during the same timeframe. Average Revenue per Occupied Bed has risen from approximately ₹43,946 in FY21 to ₹50,990 in FY23, while Bed Occupancy Rate improved from 45.2% in FY21 to 62.6% in FY23. Return on Capital Employed (RoCE) expanded to 20.9% in FY23 from 6% in FY21. At the upper end of the price band (₹695-735), the issue appears to be richly priced but in line with peers, with a valuation of 56.7x FY23 EPS.
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