KIMS IPO opens for subscription, analysts say issue price attractive; should you invest?

KIMS IPO opens for subscription at present.

Krishna Institute of Medical Sciences preliminary public providing (IPO) opened for subscription at present, with the agency seeking to elevate Rs 2,143 crore by means of a mix of recent problem and a proposal on the market (OFS) by current shareholders. Krishna Institute of Medical Sciences (KIMS) is without doubt one of the main healthcare teams within the states of Andhra Pradesh and Telangana, rising from a 200-bed hospital within the yr 2000 to a series of multi-speciality hospitals now. The IPO, after opening at present, will stay obtainable for buyers to subscribe to until Friday night. Forward of the IPO, the corporate has raised Rs 956 crore from anchor buyers.

Subject particulars

KIMS’ public problem consists of a recent problem of fairness shares price Rs 200 crore or 24.24 lakh fairness shares of face worth Rs 10. The provide on the market will see current shareholders promote 2.35 crore fairness shares. Among the many promoter promoting shareholders are Bhaskara Rao Bollineni, Rajyasri Bollineni, Bollineni Ramanaiah Memorial Hospital, Seenaiah Bollineni, and Bollineni Aishwarya. Normal Atlantic Singapore, an investor within the healthcare enterprise can even be promoting a stake within the firm. Submit problem, promoter shareholding will drop to 38.8% from the present 46.8%. The general public shareholding will improve from 53.2% to 61.2%.

Traders can bid for the difficulty on the value band of 815-825 per share, in a bid lot of 18 shares and multiples thereafter. Of your entire problem, 75% is reserved for certified institutional buyers, 15% is for Non-institutional buyers, and 10% for retail buyers. Workers of the agency may also bid for the difficulty at a particular low cost of Rs 40. Proceeds from the recent problem shall be used in the direction of compensation of Rs 150 crore of its complete debt excellent and the remaining funds are for use partly for capex and common company functions. 

Enticing pricing of IPO

KIMS has gone from being a loss-making entity in 2019 to a worthwhile agency within the earlier monetary yr. Between monetary yr 2017-18 and 2020-2021 revenues / EBITDA / PAT of KIMS have grown at a 3-year CAGR of 20.4% / 114% / 105%, in response to brokerage and analysis type Ventura securities. “We worth the inventory at Rs 1,275 (17x FY24 EV/EBITDA). This represents a possible upside of 55% from the IPO value of Rs 825 per share (higher band) over the subsequent 24 months,” they added, whereas pinning a ‘Subscribe’ ranking on the difficulty for long run investing. 

KIMS has demonstrated among the best monetary performances amongst friends, in response to ICICI Direct. “It additionally has an nearly internet debt-free steadiness sheet, wholesome FCF in monetary yr 2020-21 regardless of working in an asset-heavy trade,” they mentioned. The brokerage agency has a ‘subscribe’ ranking on the difficulty with a watch on itemizing beneficial properties. “As a consequence of steep competitors, increasing in different geographies could depress financials, going forward,” ICICI Direct added.

Analysts at Angel Broking discover the IPO is priced higher than friends firms. “Firm has a really wholesome steadiness sheet with adverse Internet Debt/ Fairness. We consider that the upcoming growth plan in Bangalore & Chennai might be funded by means of inner accruals and a minimal quantity of debt.  We’re assigning a “Subscribe” suggestion to the difficulty,” they mentioned.

Key issues

Among the many key dangers aligned with KIMS, HDFC Securities believes the corporate is extremely depending on healthcare professionals, that it interact on a consultancy foundation. Additional the pandemic has hit the enterprise and should proceed doing so sooner or later. The corporate, in response to HDFC Securities, is extremely depending on hospitals in Hyderabad for revenues and in addition considerably depending on sure specialities for a majority of its revenues. The brokerage agency has not assigned a ranking to the difficulty.