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Review By Dilip Davda on October 29, 2022

•    GHL is a world-renowned multi-speciality healthcare centre operating under the "Medanta" brand. 
•    It has reported growth in its working except for FY21, the pandemic year.
•    The issue is attractively priced compared to its listed peers. 
•    Investors may consider investing in this issue with medium to long-term perspectives. 

ABOUT COMPANY:
Global Health Ltd. (GHL) is one of the largest private multi-speciality tertiary care providers operating in the North and East regions of India in terms of bed capacity and operating revenues amongst the players that operate in the North and East regions of India, as of and for the financial year ended March 31, 2022, with key specialities of cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopaedics, liver transplant, and kidney and urology, according to CRISIL Report. 

Under the "Medanta" brand, it has a network of five hospitals currently in operation (Gurugram, Indore, Ranchi, Lucknow, and Patna) and one hospital (Noida), which is under construction. As of June 30, 2022, it provides healthcare services in over 30 medical specialities and engages over 1,300 doctors led by experienced department heads, spanning an area of 4.7 million sq. ft., its operational hospitals have 2,467 installed beds.

GHL's hospital at Gurugram was ranked as the best private hospital in India for three consecutive years in 2020, 2021, and 2022, and was the only Indian private hospital to be featured in the list of top 200 global hospitals in 2021 and was featured in the list of top 250 global hospitals in 2022 by Newsweek. Its hospital at Gurugram was also featured in the list of the world's best-specialized hospitals for cardiology and neurology in 2022 and the list of world's best-specialized hospitals for cardiology in 2021 by Newsweek and was awarded the 'Best Multi-Speciality Hospital - National' at the 'Economic Times Healthcare Awards 2021' and ranked as the best multispecialty private hospital in North India by 'The Week' in 2021. In addition, its hospital at Gurugram ranked as the best multi-speciality private hospital in North India and the second best private hospital in India as per "Best All India Multi Speciality Hospital Ranking 2022" by Outlook and NEB Research.

As of March 31, 2020, GHL had 2,141 installed beds, which grew to 2,467 installed beds as of June 30, 2022, representing a growth of 15.23%. Upon operation of our Noida hospital in Fiscal 2025, it expects the number of total installed beds to exceed 3,500 at the end of Fiscal 2025, which will cater to domestic and international patients as part of GHL's strategy to capitalize on medical tourism. The company follows the need-based model of operations rather than greed-based. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for investments in two subsidiaries i.e. GHPPL and MHPL (Rs. 375.00 cr.), and general corporate purpose, GHL is coming out with a maiden combo issue of fresh equity shares worth Rs. 500.00 cr. (approx. 14880976 shares) and an offer for sale (OFS) of 50761000 shares (approx. Rs. 1705.57 cr.) via the book-building route. It has announced a price band of Rs. 319.00 - Rs. 336.00 per share of Rs. 2 each and mulls mobilizing overall Rs. 2205.57 cr. (approx. 65641976 shares) at the upper cap. The issue opens on November 03, 2022, and will close on November 07, 2022. A minimum application is to be made for xx shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 24.48% of the post-IPO paid-up capital of the company. The company has allocated 50% for QIBs, 15% for HNIs, and 35% for Retail investors. 

The joint Book Running Lead Managers (BRLMs) to this issue are Kotak Mahindra Capital Co. Ltd., Credit Suisse Securities (India) Pvt. Ltd., Jefferies India Pvt. Ltd., and JM Financial Ltd. while KFin Technologies Ltd. is the registrar to the issue. 

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 34.50 to Rs. 115.00 (based on FV of Rs. 2 per share) between March 2006 and September 2022. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 2.02, Rs. 11.50, Rs. 144.18, and Rs. 145.60 per share. 

Post issue, GHL's current paid-up equity capital of Rs. 50.66 cr. will stand enhanced to Rs. 53.64 cr. At the upper cap of the IPO pricing, the company is looking for a market cap of Rs. 9011.01 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, GHL has (on a consolidated basis) posted turnover/net profits of Rs. 1544.27 cr. / Rs. 36.33 cr. (FY20), Rs. 1478.16 cr. / Rs. 28.81 cr. (FY21), and Rs. 2205.82 cr. / Rs. 196.20 cr. (FY22). It suffered a minor setback during the pandemic for FY21. For Q1 of FY23, it earned a net profit of Rs. 58.71 cr. on a turnover of Rs. 626.54 cr. 

For the last three fiscals, GHL has (on a consolidated basis) reported an average EPS of Rs. 4.51 and an average RoNW of 7.21%. The issue is priced at a P/BV of xx based on its NAV of Rs. 66.17 as of June 30, 2022, and at a P/BV of xx based on its post-IPO NAV of Rs. xx (at the upper cap). 

If we annualize FY23 earnings and attribute it to post-issue fully diluted paid-up equity capital, then the asking price is at a P/E of 38.36. Thus the issue is priced attractively compared to its listed peers. 

DIVIDEND POLICY:
While the company has not declared any dividends on equity shares, it paid a dividend of 0.00001% for the last three fiscals on CCPS. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, GHL has shown Apollo Hospitals, Fortis Healthcare, Max Healthcare, and Narayan Hrudayalaya as their listed peers. They are currently trading at a P/E of 77.47, 00, 126.92, and 86.71 (as of October 28, 2022). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKERS' TRACK RECORDS:
The four BRLMs associated with this issue have handled 53 public issues in the past three years, out of which 13 issues closed below the issue price on the listing date. 

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