Kolkata-based GPT Healthcare Limited, which operates and manages mid-sized multispecialty hospitals under the ILS Hospitals brand, has filed preliminary papers with capital market regulator SEBI to raise funds through an initial share-sale. As per market sources, GPT Healthcare IPO is likely to mobilize anywhere between INR450-500 crore.
The upcoming IPO consists of a fresh issue of equity shares aggregating to INR17.5 crore, and an offer for sale (OFS) of up to 29.89 million equity shares, according to the draft red herring prospectus (DRHP).
As part of the OFS, BanyanTree Growth Capital II LLC, a Mauritius-based structured private equity, will sell up to 26.08 million equity shares, thereby fully exiting the company. In addition, promoter GPT Sons Pvt Ltd will offload up to 3.8 million equity shares. At present, GPT Sons Private Limited holds 67.3% stake in GPT Healthcare and BanyanTree Growth Capital II LLC owns 32.6% stake in the company.
Proceeds from the fresh issue will be used to purchase medical equipment amounting to INR13.2 crore over the next 2 years besides general corporate purposes.
GPT Healthcare IPO: Business background
Founded by Dwarika Prasad Tantia and Dr Om Tantia, the company started as an 8 bed hospital at Salt Lake, Kolkata in 2000. Today it operates a network of 3 hospitals under the ILS Hospital brand in West Bengal and 1 in Tripura with a total capacity of 556 beds and attends to over 35 specialties and super specialties such as internal medicine, diabetology, gastroenterology, orthopaedics and joint replacements, interventional cardiology, neurology, neurosurgery, paediatrics and neonatology.
Dr. Om Tantia, has over 4 decades of experience as a surgeon and is a specialist in the field of laparoscopic surgery. He has been the president of the Association of Minimal Access Surgeons of India along with multiple accolades to his credit, including the honorary professorship bestowed by the Indian Medical Association.
GPT Healthcare IPO: Higher revenue, profits
The company’s total income increased 15.2% from INR216.08 crore in fiscal year 2020 to INR248.9 crore in fiscal year 2021, primarily due to the increases in income from hospital services, primarily from private patients; income from pharmacy sales, as well as non-operating income. In the latest fiscal year, GPT Healthcare’s net profit stood at INR21.1 crore, up from INR11.0 crore a year ago.
In FY2021, its EBITDA margin was at 22.1% compared with 18.5% in 2020. Additionally, its net operating profit margin stood at 8.7%, highest amongst key listed players such as Apollo Hospitals Enterprise Limited, Narayana Health Limited, Max Healthcare Institute Limited, Fortis Healthcare Limited and Shalby Limited, according to a CRISIL report.
Working on asset light model
The company intends to grow the urology, neurology, interventional cardiology and oncology specialties and expand its network of hospitals into markets in eastern India and adjacent regions via greenfield and brownfield projects where quality healthcare is still under-penetrated.
Nevertheless, GPT Healthcare plans to expand through an asset light model. In line with this strategy, it has recently signed an MOU and long-term lease agreement for a hospital with 140 beds in Ranchi where the investment in land and building construction would be borne by a third party in return for periodic rent payments. Its Ranchi Hospital is expected to commence operations in 2025. Lucknow, Varanasi, Patna, Guwahati, Cuttack and Raipur are other locations where the company is considering to expand.
The healthcare delivery market in India is expected to grow at a CAGR of 15% – 17% between fiscal years 2021 and 2025 driven by pent up demand coming back onto the system, strong fundamentals, increasing affordability and Ayushman Bharat Yojana, to reach INR7.67 trillion in fiscal Year 2025. The share of treatments (in value terms) by private players is expected to increase from 58% in Fiscal Year 2021 to nearly 73% in Fiscal Year 2025.
Dam Capital Advisors Limited, and SBI Capital Market Limited are the book running lead managers to GPT Healthcare IPO.