Yatharth Hospital files DRHP with SEBI for IPO

Yatharth Hospital and Trauma Care Services Ltd filed draft red herring prospectus (DRHP) with SEBI for its proposed initial public offer (IPO). The IPO will be a combination of a fresh issue and an offer for sale.

It will comprise of a fresh issue of Rs.610 crore and an offer for sale (OFS) of up to 65.50 lakh shares by current promoters and early investors. The approval of the DRHP by SEBI typically takes between 2 to 3 months.

The offer for sale (OFS) consists of a total of 37.40 lakh shares by Vimla Tyagi, up to 20.20 lakh shares by Prem Narayan Tyagi and up to 7.87 lakh shares by Neena Tyagi. The OFS is neither capital dilutive nor EPS dilutive.

However, the OFS will result in transfer of ownership from the promoters to the public and will thus improve the free float of the stock, which normally facilitates listing. 

Let us now look at how the fresh proceeds of Rs.610 crore will be utilized. Net of issue expenses, the funds will be allocated as under.

1) The funds to the tune of Rs.250 crore will be used to repay the debt of Yatharth Hospital and its arm AKS Medical and Research Centre and Ramraja. Currently, the total borrowings of Yatharth Hospital and its subsidiary stand at Rs.103 crore and Rs.153 crore, respectively.

2) In addition, a sum of Rs.137 crore will be used for funding capital expenditure. These capex pertains to the 3 fully functional super-speciality hospitals in Noida, Greater Noida and Noida Extension. Yatharth recently acquired a hospital in Orchha, Madhya Pradesh.

3) In addition to the above, Yatharth Hospital will also deploy Rs.65 crore for funding inorganic growth via acquisitions and other strategic initiatives. The company will look to proper growth to a higher plane. It will use the inorganic route for niche purchases and for lateral expansion of offerings. 

For the fiscal year FY21, Yatharth Hospital reported sales revenues arising from operations to the tune of Rs.228.67 crore; representing YoY growth of 56.5%. During the same period, the net profits grew multi-fold from a loss of Rs.2.05 crore to a profit of Rs.19.59 crore, magnified by the unfavourable base. 

The issue will be lead managed by IIFL Securities, Intensive Fiscal Services and AMBI Private Ltd. They will act as the book running lead manages (BRLM) to the issue. The stock is proposed to be listed on the NSE and the BSE.