The offer comprises a fresh issue of equity shares aggregating up to Rs 480 crore and an offer for sale of up to 10,00,000 equity shares by the promoter Vikram Shah Burman, which at the upper end of the price band will fetch Rs 24.8 crore.
Proceeds of the IPO will be utilised towards repayment of borrowings availed by the company besides purchasing medical equipment for existing, recently set-up as well as upcoming hospitals, the company said in an IPO note.
Here's is what brokerages recommend on the issue:
At the higher end of the price band of Rs 248, the issue is priced at 42.8x its FY17 earnings and 41.1x its EV/EBITDA. At this valuation, the issue of Shalby is attractively priced compared to close peer Narayana Hrudayalaya (recent IPO in the sector) trading at 72x P/E and 27.1x EV/EBIDTA. Shalby’s RoE of 26.6% is better compared to peers’ average of 11.8% for FY17. Considering robust growth, high return ratios, strong balance sheet and future prospects, investors can be advised to 'subscribe' to the issue. There is an underlying assumption that Shalby would maintain healthy growth rates going ahead.
At the higher price band of Rs 248, Shalby’s share is available at a P/E multiple of 42.8x which is at a discount to its peer’s P/E(x) (Apollo Hospitals – 67.7x, Narayana Hrudayalaya – 90x and Healthcare Global – 118.4x).
The brokerage has a 'subscribe' rating on the IPO.
Company is bringing the issue at price band of Rs 245-248 per share at P/E multiple of 46-47. It has leadership in orthopaedics with integrated and scalable business model enhancing patient reach and is experienced player with longstanding presence .Hence, we recommend 'Subscribe' on issue for long term.
Key risks based on IPO note
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