Mumbai: Shares of Gujarat-based Shalby Ltd made a weak market debut on Friday. The company, which runs a multi-speciality hospital chain, saw its stock close at Rs239.60 on the National Stock Exchange, down 3.3% from the issue price of Rs248. The issue stock listed opened at Rs239.70.
The initial public offering of Shalby was open for subscription from 5-7 December in a price band of Rs245-248 per share. The Rs504.8 crore share sale was subscribed 2.82 times.
The company will use Rs300 crore of fresh proceeds to retire debt, which will see finance costs shrink by Rs27 crore in fiscal year 2018 (FY18) and make it almost debt free. A sum of Rs63.58 crore will be used for purchase of medical equipment for existing, recently set-up and forthcoming hospitals, and Rs11.18 crore will be spent on interiors, furniture and allied infrastructure for upcoming new hospitals.
Shalby’s debt rose to Rs310.9 crore by the first quarter of FY18 and its debt-to-equity ratio increased to 1.1 from 0.3 in FY14.
The company’s hospitals are tertiary care providers, a few of which also offer quaternary healthcare services to patients in various areas of specialization such as orthopedics, complex joint replacement, cardiology, neurology, oncology and renal transplants. As on date, Shalby provides inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate capacity of 2,012 beds.
Analysts said the issue was offered at a discount compared to its peers. “At the higher price band of Rs248, its share is available at a price-to-earnings (P-E) multiple of 42.8 times which is at a discount to the P-E of its peer Apollo Hospitals at 67.7, Narayana Hrudayalaya at 90 and Healthcare Global at 118.4,” said Choice Equity Broking Pvt. Ltd (in a report on 1 December ). Shalby is a fundamentally strong, well-managed company and the issue comes at an attractive valuation, it added.