Shanmuga Hospital Lists Flat at Issue Price on BSE SME, Hits Lower Circuit

Shanmuga Hospital Limited, a multispecialty healthcare provider operating since 2020, made a disappointing entry into the public markets on Friday, February 21, 2025. The company, which operates a 151-bed hospital facility in Salem, Tamil Nadu, commenced trading on BSE SME at par with its issue price before facing immediate selling pressure despite moderate subscription numbers.

Shanmuga Hospital Listing Details 

The company's market debut presented a challenging picture between primary market response and secondary market valuation:

• Listing Time & Price: When trading commenced at market open, Shanmuga Hospital shares debuted at ₹54 on BSE SME, exactly at par with the issue price of ₹54. This flat opening came after the IPO's moderate subscription of 2.51 times, with primarily retail investor interest.
• Issue Price Context: The company had fixed the IPO price at ₹54 per share. The market's immediate response suggests investors were cautious about the valuation despite the company's established presence in the regional healthcare sector.
• Price Evolution: By 11:25 AM IST, the stock hit the lower circuit, trading at ₹51.30 after touching an intraday low of ₹51.30, representing a loss of 5% from the issue price, with no buyers visible at current levels.

First-Day Trading Performance of Shanmuga Hospital

The trading activity showed limited participation with bearish sentiment:

• Volume and Value: Within the first few hours, trading volume reached 1.20 lakh shares, generating a turnover of ₹63.55 lakh, with 100% of traded quantity marked for delivery.
• Demand Dynamics: The stock's trading pattern showed no visible buy orders against substantial sell orders for 7,48,000 shares, indicating significant selling pressure and lack of buying interest at current levels.

Market Sentiment and Analysis

• Market Reaction: Flat opening followed by immediate lower circuit
• Subscription Rate: The IPO had been subscribed 2.51 times overall
• Category-wise Response: Retail portion showed strongest interest at 4.41 times, while NII portion was undersubscribed at 0.6 times

Growth Drivers and Challenges 

Expected drivers of future performance:

• Strong oncology presence
• Experienced promoters
• Affordable healthcare focus
• Advanced medical equipment
• Insurance company tie-ups
• Strategic location advantage

Potential challenges:

• Regional concentration risk
• High competition intensity
• Working capital needs
• Doctor retention
• Regulatory compliance costs
• Inconsistent financials

Utilisation of IPO Proceeds 

The ₹20.62 crore raised through fresh issue will be used for:

• Purchase of medical equipment
• General corporate purposes

Financial Performance of Shanmuga Hospital

The company has shown mixed results:

• Revenue of ₹43.39 crore in FY2024
• H1 FY2025 (ended September 2024) showed revenue of ₹24.83 crore with PAT of ₹2.39 crore
• Net Worth of ₹19.53 crore as of September 2024
• Total borrowings of ₹9.76 crore
• Total assets of ₹36.53 crore as of September 2024

As Shanmuga Hospital begins its journey as a listed entity, market participants will closely monitor its ability to maintain operational efficiency and profitability metrics. The flat listing followed by lower circuit suggests investors are concerned about valuation multiples and regional business concentration. The company's ability to execute its expansion plans while managing costs in a competitive healthcare sector will be crucial for potential price recovery and long-term investor confidence.