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Healthcare Global IPO review (Apply)

Review By Dilip Davda on Mar 9, 2016

Healthcare Global Enterprises Ltd (HCG) is the first main board IPO that is breaking the ice post budget for primary market. HCG is a provider of speciality healthcare in India focused on cancer and fertility. Under the “HCG” brand, the company operates the largest cancer care network in India in terms of the total number of private cancer treatment centres licensed by the AERB as of May 31, 2015. Under the “Milann” brand, it operates fertility centres. As of December 31, 2015, HCG network consisted of 14 comprehensive cancer centres, including its centre of excellence in Bengaluru, three freestanding diagnostic centres and one day care chemotherapy centre across India. Each of HCG’s comprehensive cancer centres offers, at a single location, comprehensive cancer diagnosis and treatment services (including radiation, medical oncology and surgical treatments). Its freestanding diagnostic centres and day care chemotherapy centre offer diagnosis and medical oncology services, respectively.

HCG’s network operates on a “hub and spoke” model, wherein HCG centre of excellence in Bengaluru serves as a “hub” to its other cancer centres. Its centre of excellence provides other centres access to centralized quality control and assurance services; establishes treatment protocols that are adhered to across HCG network; provides centralized treatment planning and tele-radiology services to help with diagnosis and treatment; conducts weekly central tumour board meetings to review complex cases; and also gives HCG network access to advanced technologies, such as WBRRS and specialized procedures such as liver transplants and stem cell therapies.

According to the company current model of providing speciality healthcare in India can be replicated in other underserved healthcare markets. To support this initiative, it is going ahead to establish a network of speciality cancer centres in Africa, similar to its cancer care network in India. It is expected that its planned network will cater to the increasing unmet demand for cancer care in Africa due to which, a large number of cancer patients travel outside the region to avail quality cancer care, including HCG’s comprehensive cancer centres in India. The company has entered into a definitive agreement with CDC, pursuant to which CDC will invest in its Subsidiary, HCG Africa, which has been formed to establish a network of comprehensive cancer centres in Africa. HCG also provides fertility treatment under Milann brand. HCG acquired 50.10% equity interest in BACC Healthcare in 2013 which operates fertility centres under the Milann brand, through itself and its wholly-owned subsidiary, DKR Healthcare. Pursuant to this acquisition, HCG now operates four Milann fertility centres in Bengaluru.

The company follows a multidisciplinary approach to cancer care across HCG network, wherein specialist physicians from various disciplines collaborate to provide the best course of treatment for each patient. This allows it to share and develop best practices, build clinical expertise and adopt standardized protocols for diagnosis and treatment, thereby improving the quality of its cancer care services.

To part finance its IT software services and hardware, to add medical equipments, repayment of debts (around Rs. 170 crore) and to raise corpus fund, the company is coming out with its maiden IPO of around 298000000 equity shares of Rs. 10 each via book building route having a price band of Rs. 205-218. The issue consists of fresh issue up to 11600000 and offer for sale from existing stakeholders to the tune of 182002000. Thus the fresh funds coming to company for about Rs. 252.88 crore and the overall size of the issue is about Rs.  649.64 based on the higher price band. Issue opens for subscription on 16.03.16 and will close on 18.03.16. Minimum application is to be made for 65 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE and NSE. BRLMs to this issue are Kotak Mahindra Capital Co. Ltd., Edelweiss Financial Services Ltd., Goldman Sachs (India) Securities Pvt Ltd., IDFC Securities Ltd., IIFL Holdings Ltd and Yes Bank Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue.

On performance front, the company’s operations have been growing on top lines, but bottom lines were in negative. Its revenue and losses (on consolidated basis) for last five fiscals were Rs. 216.19 cr. /Rs. 6.30 cr. (FY 11), Rs. 270.22 cr. / (Rs. 3.33 cr.) (FY 12), Rs. 340.68 cr. / (Rs. 10.51 cr.) (FY 13), Rs. 455.06 cr. / (Rs. 35.55 cr.) (FY 14) and Rs. 524.19 cr./ Rs. 0.55 cr. (FY 15). For the eight months ended 30.11.15 of the current fiscal, it has posed loss of (Rs. 3.71 cr.) on a revenue of Rs. 381.28 cr. Thus on the basis of losses, its asking price it at a negative P/E. In the fiscal FY 15 and FY 16 it has incurred losses of about 9.30 crore on account of closing of unrewarding hospitals.

Based on Rs. 10 paid up value, the company issued shares in the price range of Rs. 11 to Rs. 351 and has also issued bonus shares in the ratio of 737 for 1000 in October 2005, 2.5 for 1 in April 2007, 1 for 1 in November 2008. Its current paid up equity capital of Rs. 73.48 crore will stand enhanced to Rs. 85.08 crore post IPO.

On Merchant bankers’ front, they have mixed trends for their past mandates.


Conclusion / Investment Strategy

Although the company’s performance has been in negative zone, unique model of Cancer and Fertility treatment under HCG and Milann brands are expected to generate positive earnings in next two to three years. Long term investors may consider investment for adding value on their investment.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Mar 9, 2016

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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Healthcare Global IPO FAQs

  1. 1. Why Healthcare Global IPO?

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

  2. 2. How is Healthcare Global IPO?

    Read the Healthcare Global IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Healthcare Global IPO what should investors do?

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

  4. 4. Is Healthcare Global IPO good?

    Our recommendation for Healthcare Global IPO is to subscribe.

  5. 5. Is Healthcare Global IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Healthcare Global IPO.

  6. 6. When will Healthcare Global IPO allotment status?

    The Healthcare Global IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Healthcare Global IPO allotment status to check.

  7. 7. When will Healthcare Global IPO list?

    The Healthcare Global IPO will list on Wednesday, March 30, 2016, at BSE, NSE.