Ahmedabad-based Shalby Ltd. (Shalby) is one of the leading multi-specialty chain of hospitals in India. Its hospitals are tertiary care hospitals, few of which also offer quaternary healthcare services to patients in various areas of specialisation i.e. orthopaedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations. Shalby’s hospitals i.e. Krishna Shalby, SG Shalby and Shalby Jabalpur are accredited by the National Accreditation Board for Hospitals and Healthcare Providers (NABH). Shalby has a domestic and overseas
presence through a network of hospitals in India and outpatient clinics and SACE located in India, Africa, and the Middle East. It provides inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate bed capacity of 2,012 beds. The company
had a 15% market share of all joint replacement surgeries conducted by private corporate hospitals in India in 2016 (Source: F&S Report).
Shalby has strong presence in western and central India. It is expanding its footprint in western and central India. Shalby is coming out with an Initial Public Offering (IPO) of 20.35-20.59mn equity shares consisting of fresh issue of equity shares up to Rs4.8bn and Offer for Sale of up to 1mn equity shares (by Dr. Vikram Shah, promoter). The issue is priced at Rs245-Rs248 per share. The shares will be listed on BSE & NSE.
Outlook & Valuation
At the upper end of the price band (Rs248), the stock is valued at P/E ratio of 42.8x FY17 earnings. Notably, Apollo Hospitals, Narayana Hrudayalaya and HCG trade at 69.1x, 73.0x and 109.2x of FY17 EPS, respectively. Thus, the valuation looks reasonable compared to its peers.
We believe the Indian hospitals industry is poised to grow in favour of the organised sector with rising affordability, awareness and increasing medical/health insurance penetration. Shalby’s growth prospects appear to be promising in medium to long-term on the back of sustainable business model and strong earnings visibility. Thus, we recommend SUBSCRIBE to the Issue.
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