Sahajanand Medical Technologies IPO : 7 things to know

Sahajanand Medical Technologies Ltd, one of India’s top stent maker, had filed its draft red herring prospectus (DRHP) in September 2021 and SEBI had already approved the IPO in mid-December 2021. However, due to the fairly volatile market conditions and IPOs reducing to a trickle, the company is yet to announce the dates of its IPO.

The company has a dominant market share in drug eluting stents (DES). The IPO is now likely to happen only in the next financial year once the LIC IPO is through.

7 important things to know about Sahajanand Medical Technologies IPO

1) Sahajanand Medical Technologies Ltd has filed for a Rs.1,500 crore IPO with SEBI which comprises of a fresh issue of Rs.410.33 crore and an offer for sale of OFS of Rs.1,089.67 crore. The company is one of the largest manufacturer and supplier of stents to the Indian market as well as to the global market.

Medical equipment is a sector that has seen a lot of fresh investor interest post the COVID pandemic as people become more health conscious and stock markets re-rate all the medical equipment related stocks.

2) Out of the total issue size of Rs.1,500 crore, let us look at the OFS portion of Rs.1,089.67 crore first. The OFS will entail the sale of stocks by the promoters and also by some of the early investors.

Among the major sellers tendering shares in the OFS, Samara Capital Market Holdings will offload shares worth Rs.635.56 crore while NHPEA Sparkle Holdings BV of Netherlands will offload shares worth Rs.320.36 crore.

In addition, the promoter Dhiraj Kumar Vasoya will offload shares worth Rs.100 crore while the Shri Hari Trust will offload shares worth Rs.33.75 crore in the OFS. These four major sellers will account for the overall OFS of Rs.1,089.67 crore for Sahajanand Medical Technologies Ltd.

3) The Rs.410.33 crore fresh issue portion will be used for predominantly for debt reduction and for working capital purposes. In fact, out of the total fresh funds raised, the company has set aside Rs.255 crore for paying off debt.

This reduction in debt is likely to reduce the interest burden, reduce the solvency risk in the balance sheet and also improve its interest coverage and debt service coverage ratios. Apart from the debt reduction, Sahajanand Medical Technologies Ltd will also use part of the IPO funds to fund the working capital requirements of its indirect foreign subsidiaries.

4) Just to give a quick background update on the company, Sahajanand Medical Technologies Ltd is one of the leading manufacturers of Drug Eluting Stents (DES) in the world and is ranked among the top-5 in this niche business in terms of market share. The company has a very strong brand leadership in markets like Germany, Italy, Poland and the Netherlands.

In the last 3 years, the market share of Sahajanand Medical Technologies Ltd has progressively moved up from 21% in FY19 to 25% in FY20 and up to an impressive 31% in FY21. The dominant market shares gives much better pricing power to the company in its pricing decisions.

5) Sahajanand Medical Technologies Ltd was originally backed by marquee names like Samara Capital and Morgan Stanley Private Equity Asia. The company focuses on the design, development and manufacturing of vascular devices globally. This IPO will be watched with interest as it is the second company in a similar business line. Earlier, Healthium Medtech backed by Apax Partners, has also applied for an IPO in the Indian markets. 

6) Sahajanand Medical Technologies Ltd  is sitting on a sweet spot in the vascular devices industry. The procedures have picked up in the last few quarters after a brief quiet period during the COVID pandemic. As the procedures increase back to normal levels, it is likely to trigger a sharp spike in the demand for vascular devices.

In fact, the total vascular market is expected to grow at the rate of 8.6% compounded annual growth rate (CAGR) between the years 2021 and 2026. While the vascular devices market doubled between 1990 and 2020 the next round of doubling will happen in just 8 years. That is likely to drive the exponential growth in this sector.

7) The IPO of Sahajanand Medical Technologies Ltd will be lead managed by Axis Capital, BOFA Securities, UBS and Edelweiss Financial Services. They will act as the book running lead managers or BRLMs to the issue.
 

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