Issue Highlights
|
Issue Period
|
16/3/2016-18/3/2016
|
|
Price Band
|
Rs.205-218
|
|
Issue Size(shares)
|
2,98,00,000
|
|
Issue Size (Rs. Crore )
|
610.9-649.64
|
|
Issue Type
|
100% Book built
|
|
Face Value (Rs.)
|
10
|
|
Listing
|
BSE,NSE
|
|
Industry
|
Healthcare
|
|
Registrar
|
Karvy Computershare Ltd.
|
|
Minimum Bid Quantity
|
65 Shares
|
|
Maximum Retail Subscription
|
Rs. 198,380(14 lots)
|
|
BRLM
|
IDFC Sec, IIFL, Yes bank, Kotak, Edelweiss, Goldman Sachs (Ind)
|
|
|
# derived figure
Issue Details
Offer for Sale: 1,82,00,000 Eq. shares
Fresh Issue: 1,16,00,000 Eq. shares
Equity Shares Outstanding Prior to the Issue : 7,34,75,986 Eq. shares
Equity Shares Outstanding After The Issue: 8,50,75,986 Eq. shares
Objects of the Issue
|
|
|
(1)
Purchase of medical equipment
|
Rs. 42.20 Crore
|
|
(2)
Invest in IT software ,services and hardware
|
Rs. 30.19 crore
|
|
(3)
Pre-payment of debt
|
Rs. 147.04 crore
|
|
(4)
General corporate purposes
|
NA
|
Company Profile
Healthcare Global Enterprises Limited is a healthcare
services provider company with a strong focus in the field of Cancer and
fertility. Under the HCG brand, company provides cancer diagnosis and treatment
services at its 14 centers. Fertility services are provided under the Milann
brand.
HCG business model works on a ‘Hub and Spoke’ model with
Bangalore centre being its hub.
Strengths
1.
Largest provider of Cancer care in India with a
proven track record
2.
Competitive pricing
3.
Fertility sector has a significant potential for
growth
Risks & Threats
(1)
The company and its two subsidiaries have
incurred losses in recent years
(2)
Corporate governance issues: frauds committed by employees and criminal
proceedings against promoters and directors are serious concerns
(3)
Most of the specialist physicians provide their
services on contract basis and thus company misses the reputation of
exclusivity
(4)
Both fields of operations especially the fertility
one is highly prone to the competition
(5)
The penetration of health insurance in India
being a lower one, does not augur good for the company
(6)
The company is significantly indebted
(7)
Weaker Rupee (against dollar) is detrimental for
the company as it makes purchases of equipment which are dollar denominated
(8)
This field is highly liable to claims of
malpractices and medical negligence
Financial Profile #
|
Parameter
|
FY 15
|
|
Price to Earnings Multiple
|
Negative, NM
|
|
Operating Profit Margin (%)
|
6.32
|
|
Return on Capital Employed (%)
|
NM
|
|
Return on Equity (%)
|
NM
|
|
Total Liability to Net worth
|
1.93
|
|
Price to Book Value !
|
6.3
|
|
Operating Cash to Sales
|
.12
|
|
TIE (Times Interest Earned)
|
.99
|
|
AR Collection Period (Days)
|
46
|
|
EV/EBITDA!
|
30.2
|
|
OCF to Sales
|
.12
|
|
Current Ratio
|
.62
|
|
Profit CAGR (%)
|
NM
|
# using FY 16 annualized
data
#upper end of the
price-band
! using
post-issue OS shares
Comparison with the Peers #
|
|
P/B
|
OPM (%)
|
TL/NW
|
ROE(%)
|
|
HCG
|
6.32
|
6.32
|
1.93
|
NM
|
|
Apollo Hospital
|
6.1
|
12.3
|
.84
|
10.96
|
# moneycontrol data
Inference
The company is highly indebted and operates in a capital-intensive
business sector and this is the sole reason for floating this issue. Though its
OCF is positive but is a meager one. At net profit level HCG has been
witnessing loss for past several years.
This issue demands valuations (P/B & EV/EBITDA) almost equivalent
to its listed peer-Apollo Hospitals-which is a profitable company.
Fertility sector is a promising one but a highly competitive one.
Besides financials, corporate governance issues are also a
major concern. I shall better avoid this
issue and give it some time to prove its mettle.
