Healthcare service provider Jupiter Life Line Hospitals is likely to list with a 30 percent premium over the issue price of Rs 735 per share on September 18, according to experts.
They optimism for a double-digit premium listing stems from the robust subscription numbers the issue had posted, its strong brand recall in the MMR region, increasing demand in the healthcare sector, and an overall bullish sentiment in the equity markets. The BSE Sensex and the Nifty50 gained nearly 5 percent, so far this month and hit their historic highs.
The Rs 869-crore initial public offering of the hospital chain was subscribed 63.72 times during September 6-8, majorly backed by qualified institutional buyers who bought 187.32 times the allotted quota. High net-worth individuals and retail investors provided support to the issue, putting in bids 34.75 times and 7.73 times the portion set aside for them.
Jupiter Life Line Hospitals operates three hospitals in the Mumbai Metropolitan Area (MMR) and western region of India with a total capacity of 1,194 beds as of March 2023.
The multi-specialty tertiary and quaternary healthcare provider has also started the construction for the fourth multi-speciality hospital in Dombivli, Maharashtra, with a capacity of over 500 beds.
“With the Jupiter Life Line Hospitals issue receiving a strong response, we remain positive when it lists on bourses on Monday. We expect the IPO to open at a premium of around 30 percent to the issue price of Rs 735 per share,” Prathamesh Masdekar, research analyst at StoxBox, said.
He believes that the company’s strong brand recall in the MMR region and focus on delivering advanced healthcare makes it lucrative from a medium-to-long term perspective.
On the financial front, Jupiter Hospital has shown a consistent improvement in performance which Masdekar feels is likely to be augmented through the retirement of debt from the IPO proceeds.
The Mumbai-based company will use the net fresh issue proceeds mainly for repaying debt worth Rs 510.4 crore, and the rest for general corporate purposes. Its total borrowings stood at Rs 476.4 crore as of March FY23.
The market capitalisation of the company stands at Rs 4,819 crore at Rs 735 per share, the upper price band.
The company, promoted by Ajay Thakker, Ankit Thakker and Western Medical Solutions LLP, recorded a profit of Rs 72.9 crore for the fiscal FY23, up 42.6 percent over the previous year, backed by revenue from operations that increased 21.7 percent on-year to Rs 892.5 crore, while its EBITDA (earnings before interest, tax, depreciation and amortisation) jumped 31.2 percent to Rs 201.3 crore. The EBITDA margin for FY23 expanded 163 bps to 22.55 percent.
Jupiter Hospital shares were available at more than 30 percent premium in the grey market, an unofficial platform wherein IPO shares can be bought and sold till the listing, analysts said on anonymity.
“Despite being fully priced in IPO, Jupiter Life managed to receive better-than-expected response from investors in all categories. With bullish optimism in secondary markets, we expect 25-30 percent listing gain,” Prashanth Tapse, research analyst, senior vice-president for research at Mehta Equities, said.
Considering demand in the healthcare sector and expansion plan in Western Regions followed by fancy demand for branded chain of hospitals, justifies the healthy premium listing, he feels.
The initial public offering launched by the company comprised a fresh issue of shares worth Rs 542 crore, and an offer-for-sale (OFS) of shares worth Rs 327.08 by selling shareholders. The price band for the offer was Rs 695-735 per share. Moneycontrol