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Aashka Hospitals BSE SME IPO review (May apply)

Review By Dilip Davda on Aug 7, 2021

•    AHL is in the healthcare servicing segment with a 200-bed hospital.
•    The company posted good performance for FY21 despite the pandemic.
•    Gujarat is becoming the most preferred destination for health treatments.
•    Sustainability of recent performance raises concern.
•    This mega SME issue is aggressively priced compared to peers.

ABOUT COMPANY:
Aashka Hospitals Ltd. (AHL) is engaged in the health care servicing segment. The Company decided to step up its support in the fight against COVID-19 and was a designated COVID-19 treatment hospital. With the support of its doctors and staff, it has treated more than 2000 COVID-19 patients.

Aashka means 'Blessing' & Aashka Hospitals signifies blessing, a blessing of fine health. It is certified by National Accreditation Board for Hospitals and Healthcare Providers ('NABH Accredited') for tertiary and apical care level hospitals in Gujarat. It is an integrated healthcare service provider, committed to delivering quality healthcare services to patients in modern facilities that include prevention, best treatment and proper rehabilitation.

AHL serves with ultra-modern medicinal practices and state of the art infrastructure for medical as well as surgical care solutions. It aims towards continuous improvement of healthcare facilities and to achieve the level of care and quality.

AHL is a part of Ayushman Bharat, a flagship scheme of the Government of India which was launched and recommended by the National Health Policy 2017, to achieve the vision of universal health coverage (UHC). The initiative has been designed on the lines as to meet SDG & its underlining commitment. Ayushman Bharat is an attempt to move from a sectoral & segmented approach of health service delivery to a comprehensive need-based health care service and Mukhyamantri Amrutam (MA) scheme is launched by Gujarat state to cater for families below the poverty line

It has an aggregate bed capacity of 140 beds extendable up to 200 beds. As of April 30, 2021, the company has conducted an aggregate of over 4,900 surgeries and provided healthcare services to an aggregate of over 65000 patients, consisting of 18000 indoor patients and 47,000 OPD patients.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for repayment/prepayment of certain borrowing in part/full (Rs. 20 cr.), funding for inorganic growth initiatives (Rs. 28.54 cr.) and general corpus fund needs (Rs. 15 cr.), AHL is coming out with a maiden IPO of 8400000 equity shares of Rs. 10 each with a fixed price of Rs. 121 per share to mobilize Rs. 101.64 cr. The issue comprises of fresh equity issue of 5400000 shares (Rs. 65.34 cr.) and an Offer for Sale (OFS) of 3000000 shares (Rs. 36.30 cr.). The issue opens for subscription on August 10, 2021, and will close on August 13, 2021. The minimum application to be made is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 35.90 % of the post issue paid-up capital of the company. The company will spend Rs. 2.80 cr. for this IPO proceeds.

The issue is solely lead managed by Fedex Securities Ltd. while Accurate Securities & Registry Pvt. Ltd. is the registrar to the issue. Rikhav Securities Ltd. is the market maker for this issue.

Having issued initial equity at par, AHL converted further equity at Rs. 100 per share in May 2017.

Post issue, AHL's current paid-up equity capital of Rs. 18.00 cr. will stand enhanced to Rs. 23.40 cr. Based on the IPO price, the company is looking for a market cap of Rs. 283.14 cr.


FINANCIAL PERFORMANCE:
On the financial performance front, AHL has posted turnover/net profits of Rs. 27.73 cr. / Rs. 1.36 cr. (FY19), Rs. 27.25 cr. / Rs. 1.38 cr. (FY20) and Rs. 40.69 cr. / Rs. 4.11 cr. (FY21).

For the last three fiscals, AHL has posted an average Eps of Rs. 1.54 and an average RoNW of 10.41%. The issue is priced at a P/BV of 7.45 based on its NAV of Rs. 16.25 per share as of March 31, 2021, and at a P/BV of 3 based on post issue NAV of Rs. 40.42 per share.

If we attribute FY21 super earnings on fully diluted post issue equity capital, then the asking price is at a P/E of around 68.75. Thus the issue is aggressively priced.

COMPARISON WITH LISTED PEERS:
As per offer documents, AHL has shown Narayana Hrudayalaya, KMC Speciality, Fortis Malar, Shalby Ltd., and Krishna Institute of Medical as its listed peers. They are currently trading at a P/E of around 00, 49.68, 00, 50.35 and 52.11 (as of August 06, 2021). However, they are not truly comparable on an apple to apple basis.

DIVIDEND POLICY:
The company has not declared any dividend since incorporation. It will adopt a prudent dividend policy post listing based on its financial performance and future prospects.

MERCHANT BANKER'S TRACK RECORD:
This is the 11th mandate from Fedex Securities Ltd. in the last four fiscals (including the ongoing one).  Out of the last 10 listings, 1 opened at discount, one at par and the rest with premiums ranging from 0.16% to 56.52% on the day of listings.


Conclusion / Investment Strategy

This mega SME issue is aggressively priced despite super performance for FY21. Gujarat is becoming the most preferred destination for health-related treatments and the management is emphasizing a low-cost operation model with ultramodern equipment and facility. Considering the base of equity, chances for migration to the mainboard in the near future, post listing, is most likely. Hence, cash surplus/risk seekers may consider parking of their funds.

Review By Dilip Davda on Aug 7, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Aashka Hospitals IPO FAQs

  1. 1. Why Aashka Hospitals IPO?

    The initial public offer (IPO) of Aashka Hospitals Limited offers an early investment opportunity in Aashka Hospitals Limited. A stock market investor can buy Aashka Hospitals IPO shares by applying in IPO before Aashka Hospitals Limited shares get listed at the stock exchanges. An investor could invest in Aashka Hospitals IPO for short term listing gain or a long term.

  2. 2. How is Aashka Hospitals IPO?

    Read the Aashka Hospitals IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Aashka Hospitals IPO what should investors do?

    Aashka Hospitals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Aashka Hospitals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Aashka Hospitals IPO good?

    Our recommendation for Aashka Hospitals IPO is to subscribe for long term.

  5. 5. Is Aashka Hospitals IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Aashka Hospitals IPO.

  6. 6. When will Aashka Hospitals IPO allotment status?

    The Aashka Hospitals IPO allotment status will be available on or around Aug 30, 2021. The allotted shares will be credited in demat account by Aug 31, 2021. Visit Aashka Hospitals IPO allotment status to check.

  7. 7. When will Aashka Hospitals IPO list?

    The Aashka Hospitals IPO will list on Wednesday, September 1, 2021, at BSE SME.

1 Comments

1. dcpatan  Aug 12, 2021 2:21:26 PM
I HAVE DOUGHT ABOUT AUTHOR'S STUDY FOR THIS PARTICULAR IPO
1.1. dcpatan  Sep 8, 2021 5:22:01 PM
i was 100% true see now aashka trade less then Rs. 100