What you must know about Aatmaj Healthcare IPO

Aatmaj Healthcare Ltd, is an SME IPO on the NSE which is opening for subscription on 19th June 2023. The company, Aatmaj Healthcare Ltd, was incorporated in 2014 and it runs multi-specialty hospitals under the brand name of Jupiter Hospitals. The intent of the hospital is to provide quality healthcare at affordable rates and it currently provides in-patient and outpatient healthcare services through its network in Gujarat. It has an aggregate bed capacity of 130 beds, extendable to 175 beds. It has treated more than 17,000 patients comprising of more than 13,000 OPD patients.

The group provides a complete suite of check-ups including haemoglobin check, lipid profile check, renal profile, blood sugar, ESR, MCH etc. It also does more complex profiles like the liver profiles. In addition, the hospital also specializes in nephrology, uro-surgery, and vascular surgery.  On the orthopaedics front, the hospital handles joint replacement surgery, post trauma care; apart from obstetrics, gynaecology and neuro and plastic surgery. 

Key terms of the SME IPO of Aatmaj Healthcare Ltd

Here are some of the highlights of the Aatmaj Healthcare Ltd IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 19th June 2023 and closes for subscription on 21st June 2023; both days inclusive.
   
• The shares of the company have a face value of ₹5 per share and the issue price for the fresh issue portion has a fixed price of ₹60 per share.
   
• As part of the fresh issue portion, the company will issue a total of 64 lakh shares at the fixed IPO price of ₹60 per share aggregating to a total fund raising of ₹38.40 crore.
   
• There is no offer for sale (OFS) portion in the IPO by promoters and early investors. Unlike a fresh issue, OFS is not capital dilutive or EPS dilutive as it only shifts ownership.
   
• Hence the fresh issue portion is also the total size of the IPO. The overall IPO also comprises of the issue of 64 lakh shares at ₹60 per share aggregating to ₹38.40 crore.
   
• The company has allocated at least 50% of the issue size for the retail investor while the balance maximum of 50% is allocated to the non-institutional investors.
   
• The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹120,000 (2,000 x ₹60 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of ₹240,000. There is no upper limit on what the HNI / NII investors can apply for.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 321,000 shares. Rikhav Securities will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter. The market making portion will be carved out of the non-retail portion.
   
• Aatmaj Healthcare Ltd plans to use the proceeds from the fresh issue (net of issue costs) towards repayment / prepayment of the existing secured debt of the company, purchase of medical equipment for the hospitals, acquisitions and working capital needs.
   
• The company has been promoted by Dr Tushar Suvagiya, Dr Subhash Padmani and Dr Ravi Apte. Currently, the promoter stake in the company stands at 88.89%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted to 63.72%.

While Nirbhay Capital Services Private Ltd will be the lead manager to the issue, Link Intime India Private Limited will be the registrar to the issue.

Key dates to be aware of in the Aatmaj Healthcare Ltd IPO (SME)

The SME IPO of Aatmaj Healthcare Ltd IPO opens on Monday, June 19th, 2023 and closes on Wednesday June 21st, 2023. The Aatmaj Healthcare Ltd IPO bid date is from June 19th, 2023 10.00 AM to June 21st, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 21st of June 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Aatmaj Healthcare Ltd

The table below captures the key financials of Aatmaj Healthcare Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The top line has been rather erratic in its growth but that can be attributed to the COVID disruption. However, the good news is that the company has consistently maintained net margins of over 20%. Even in the latest year, the net margins are hovering around the 25% mark. Also, affordable healthcare is a big booming business model and the company has the track record of providing reasonable and reliable healthcare services.

How does the company look on the valuation front. The weighted average EPS of the last three years comes to ₹5.41 per share. For the first nine months of FY23, the company has reported EPS of ₹3.56, so it should be a reasonable estimate. In terms of P/E valuation, the IPO price of ₹60 discounts the forward EPS by 11.1 times. That is a very reasonable and much lower than what healthcare outlets in India manage to command. Investors with risk appetite can look at this IPO as an opportunity in the fast growing organized healthcare space.