Indian IPOs
>> Lotus Eye Care Hospital
Lotus Eye Care Hospital IPO Note
11 June 2008
Source: www.keynoteindia.net
Price Band: Rs. 38 - 42 per share
Issue open between: June 12 - June 17, 2008
Book Running Lead Managers: Keynote Corporate Services Ltd.
To List on: NSE and BSE
Market Cap post-listing: Rs. 87 Cr. or $20 million (based on the cap price)
Executive Summary
Lotus Eye Care Hospital Ltd. (LECHL) is a leading super-speciality eye care company with eye care hospitals and clinics at locations in South India. It has a network of 4 hospitals, out of which 2 are based Coimbatore, and one each in Salem and Tirupur.
Top line and bottom line grew @ 177.6% and 147.7% respectively in FY07 on y-o-y basis. It has reported EBITDA margins of 39.7% in FY07.
Indian health care sector is valued at $34bn and is projected to be $40bn by 2012. Healthcare accounts for approx. 6% of the GDP and is focused on by both the government and the private sector.
Medical tourism can be a major trigger. Indian medical tourism was estimated at $350mn in FY06 and is projected to grow to $2bn by 2012. The emergence of India as a destination for medical tourism leverages the country’s well educated, English-speaking medical staff, state-of-the-art private hospitals and relatively low cost to address healthcare needs of western world. India provides treatment, at less than 1/10th of cost in US.
This industry is highly financial and human capital intensive. LEHCL scores well on this front; it has hi-tech eye care equipment and ophthalmic experts backed by a well-trained paramedical and administrative team. It has readily available human resources for the proposed expansion. It also has a training centre for budding ophthalmologists.
Expansion plan involves capex of Rs55Cr to be funded through mix of equity, debt and internal accruals for expansion at existing units and setting up new centres.
Concerns are timely implementation of expansion and staff retention. Timely implementation of expansion of eye care centre may pose a challenge, as it may be difficult to get the required number of qualified doctors and other support staff to work in these locations. Retention of key personnel may also be a challenge.
At the cap price, the IPO is priced at a 16% discount to the price (Rs50) in respect of pre-IPO placement in January 2008 to BCCL. IPO is priced at 31.8x based on pre-issue weighted average EPS and at 20.7x based on annualised EPS for 9 months to December 2007 on pre-issue basis.
To read more download full version of Lotus Eye Care Hospital IPO Note.
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