What you must know about Maitreya Medicare IPO?

Maitreya Medicare Ltd owns and operates the Maitreya Multispecialty Hospital. This is a 125 bed multispecialty hospital located in the industrial city of Surat in Gujarat. The city is easily accessible from major cities like Ahmedabad, Vadodara and Mumbai by road, rail and by air. Maitreya Medicare Ltd strives to provide quality healthcare services at affordable prices to make it highly accessible. The facility includes an ultra-modern CATH lab with IVUS/FFR/Rota and 20-bed ICU equipped with latest ECMO/CRRT ventilators and monitors.

To conduct modern procedures of peripheral Vascular Cath Intervention, the centre has also acquired modern equipment like Neuro Interventional Modular operation theatre. Some of the major specialization areas of the company include Cardiology, Cardiothoracic & Vascular Surgery, Critical Care Medicine, Orthopaedic & Joint Replacement Surgery, Neurology, Neurosurgery, Gastroenterology, General & Laparoscopic Surgery, Urology, Nephrology, Oncology, Onco-surgery, Gynaecology & High Risk Obstetrics, and Emergency & Trauma.

Key terms of the SME IPO of Maitreya Medicare Ltd

Here are some of the highlights of the Maitreya Medicare IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 27th October 2023 and closes for subscription on 01st November 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and it is a book built issue. The issue price band for the IPO has been fixed in the range of ₹78 to ₹82 per share. Being a book building issue, the IPO price will be discovered after the book is built.
   
• The IPO of Maitreya Medicare Ltd has only a fresh issue component with no book built portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh portion of the IPO, Maitreya Medicare Ltd will issue a total of 18,16,000 shares (18.16 lakhs approximately), which at the upper band IPO price of ₹82 per share aggregates to a total fresh fund raising of ₹14.89 crore.
   
• Since there is no offer for sale portion, the size of the fresh issue will also be the total size of the IPO. Hence the total IPO size will also comprise of 18,16,000 shares, which at the upper IPO price band of ₹82 per share will aggregate to ₹14.89 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 1,08,800 shares. The market maker for the issue is Giriraj Stock Broking Private Ltd and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs.
   
• The company has been promoted by Dr. Narendra Singh Tanwar, Dr. Pranav Rohitbhai Thaker, and Vimalkumar Natverlal Patel. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares and the OFS, the promoter equity holding share will reduce to 73.20%.
   
• The fresh issue funds will be used by the company for investing in the equity of its subsidiary, Maitreya Hospitals Private Ltd and for redemption of NCDs. Part of the monies raised will also go towards meeting working capital needs and towards general expenses.
   
• GYR Capital Advisors Private Ltd will be the lead manager to the issue and Link Intime India Private Ltd will be the registrar to the issue. The market maker for the issue is Giriraj Stock Broking Private Ltd.

IPO allocation and minimum lot size for investment

The company has allocated 5.99% of the issue size for the market makers to the issue, Giriraj Stock Broking Private Ltd. The net offer (net of market maker allocation) will be divided between the QIBs, the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Maitreya Medicare Ltd in terms of the allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹131,200 (1,600 x ₹82 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 3,200 shares and having a minimum lot value of ₹262,400. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Maitreya Medicare Ltd IPO (SME)

The SME IPO of Maitreya Medicare Ltd IPO opens on Friday, October 27th, 2023 and closes on Wednesday, November 01st, 2023. The Maitreya Medicare Ltd IPO bid date is from October 27th, 2023 10.00 AM to November 01st, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is November 01st, 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 Maitreya Medicare Ltd

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

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• It is tough to take a sales call as the sales growth has been negative in the last two years and erratic top line remains a big challenge for the company. Also, it is too focused on just one hospital, whereas the market trend is to expand the franchise.
   
• The net margins are above 10% in the latest year but rather erratic in the previous year. However, due to the low equity base, the ROE is fairly attractive. The first half numbers for FY24 promise a better performance, although profits will be under pressure.
   
• Despite being a capital heavy business, the asset turnover ratio or the asset sweating ratio has been above 1.5 on a consistent basis. That is positive since most of the costs in the healthcare industry tends to be front-ended.

With a latest year EPS of ₹7.93 per share and weighted average EPS of 3 years of ₹5.88, the IPO valuation looks to be between 10 times and 14 times earnings, depending on which EPS measure you use. That is not too high for the healthcare industry, where such valuations tend to be rather steep. However, the erratic revenues and the focus on just a small region makes it a risky business. Investors have to be wary of this aspect while making an IPO call.