The good run of IPOs continued to spill into 2016, with the strong listing of Dr Devi Shetty promoted Narayana Hrudayalaya on Wednesday.
On the NSE, the stock got listed at Rs 291, a plum 16 per cent premium against its issue price of Rs 250. The stock is now trading around Rs 328, sporting a 30 per cent listing gain.
The strong listing follows the stellar debuts by drug marker Alkem Laboratories and diagnostic chain Dr Lal PathLabs in 2015.
Founded in 2000, the company is expected to deliver healthy revenue and profit growth over the next three years. Higher contribution from value-added therapies, pay-off from its recent acquisitions and focus on mid-income segment should provide fillip to its earnings.
Narayana Hrudayalaya's patient volume has risen from 10 lakh in 2012-13 to 18 lakh in 2014-15. Its bed occupancy rate has also shown corresponding improvement in the same period, from 44.83 per cent to 52.78 per cent.
In 2014-15, total revenues rose 23 per cent YoY to ₹1,372 crore. A healthy 80 per cent of revenue is contributed by in-patients. For the six months ended September 2015, the company posted a revenue of ₹783 crore.
Lease/management contract/revenue share model for expansion has contributed to a low debt-equity ratio of 0.3 times – lower than Apollo Hospitals (0.52 times).
In 2014-15, Narayana Hrudayalaya’s operating profit margin for hospitals with a maturity of over five years and three to five years was 23.5 per cent and 4.8 per cent, respectively. With added capacities migrating to over five-year maturity, there is scope and potential for expansion in margin.
Narayana Hrudayalaya has a strong focus in Karnataka with hospitals in West Bengal, Jharkhand, Chhattisgarh, Rajasthan, Telangana and Gujarat. It has a network of 23 hospitals, 8 heart centres and 24 primary care facilities across 31 cities, towns and villages. Its expansion plans include commissioning of hospitals at Mumbai, Lucknow, Vaishno Devi and Bhubaneshwar.