Mumbai: Shares of Gujarat-based company Shalby Ltd has made a weak market debut. The group, which runs a multi-specialty hospital chain, was listed at Rs237 per share compared to the issue price of Rs248.
At 10.05am, the stock was trading 0.6% lower at Rs246.55 on the BSE, while benchmark Sensex index rose 1.04% to 33,591.77 points. The stock touched a high and a low of 247.70 and 236.20 a share, respectively.
The initial public offering (IPO) of Shalby was open for subscription from 5-7 December with a price band of Rs245-248 per share to raise Rs504.8 crore through the share sale.
The company will use Rs300 crore of fresh proceeds to retire the debt, which would reduce Rs27 crore of finance cost in FY18 and make the company almost debt free. The remaining proceeds will be used for purchase of medical equipment for existing, recently set-up and upcoming hospitals worth Rs63.58 crore, purchase of interiors, furniture and allied infrastructure for upcoming hospitals worth Rs11.18 crore. The company’s debt increased to Rs310.9 crore by the first quarter of FY18 and debt-to-equity ratio increased to 1.1 from 0.3 in FY14.
The company’s hospitals are tertiary care hospitals, few of which also offer quaternary healthcare services to patients in various areas of specialisation such as orthopaedics, complex joint replacements, cardiology, neurology, oncology and renal transplantations. As on the date, the company has provided inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate bed capacity of 2,012 beds.
Analysts said the issue is offered at a discounted rate to its peers. “At the higher price band of Rs248, its share is available at a price-to-earnings (PE) multiple of 42.8 times which is at a discount to the PE of its peer Apollo Hospitals at 67.7, Narayana Hrudayalaya at 90 and Healthcare Global at 118.4,” said Choice Equity Broking Pvt. Ltd. It said in a report on 1 December that Shalby is a fundamentally strong, well-managed company and the issue is available at attractive valuation.