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Shalby Hospitals IPO: A good long term investment; Subscribe -
Shalby Hospitals IPO: A good long term investment; Subscribe
SPA Securities | Published: 05 Dec, 2017  | Source :

Shalby Hospitals is one of the leading multi-specialty chain of hospitals in India. The hospitals are tertiary care hospitals, few of which also offer quaternary healthcare services to patients in various areas of specialization such as orthopedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations. The company provides inpatient and outpatient healthcare services through eight fully operational hospitals, having an aggregate operational bed count of 781 beds, as on March 31, 2017. This apart, it currently provides outpatient consultative healthcare services through three hospitals which were recently set up. Its 11 hospitals, inclusive of eight fully operational and three hospitals which were recently set up, have an aggregate bed capacity of 2,012 beds, as on March 31, 2017.

Investment Rationale:

- Leadership in orthopedics and strong capabilities in other specialties

- Integrated and scalable business model

- Experienced player with longstanding presence and brand recall

Outlook and Valuation

Since FY12, the company has experienced a steady growth in providing orthopedic and non-orthopedic healthcare services, maintaining higher margins and RoE than its peers because of several cost efficiency measures, such as procurement of medical consumables, lower capital expenditure per bed, higher beds to operation theatre, and better space utilization. This helps the company achieve EBITDA positive levels for new hospitals in less than two years. The company's revenues, EBITDA and PAT have grown at a CAGR of 7.9%, 5.1% and 16.8% respectively, between FY14-17. The company has showcased healthy EBITDA margins in the range of 20-25% consistently. At the upper price band of INR 248/share, the issue is valued at a PE of 35x with FY17 Adj.EPS of INR 7.0. We recommend to SUBSCRIBE to the issue as a good long term investment.

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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.