
ISSUE OPENS / CLOSES ON 30-12-11 / 09-01-12
IPO GRADE : GRADE 3 BY CARE.PRICE BAND RS 165-175 Goodwill Hospital, which runs a multi specialty hospital of 220 beds in Noida under the brand Ojjus Medicare, is planning an IPO to mobilize Rs 62Cr for expansion. Each equity share carries one detachable warrant.
SPA Merchant Bankers Limited are the book running lead managers to the issue.
Goodwill Hospital focuses on core areas such as neurology and neuro surgery, cardiology and cardiac surgery with emphasis on joint replacements and sports injuries. It also provides other services like pediatrics’, diagnostic, critical care medicine, oncology and dermatology.
Goodwill Hospital was established in 2000. In Dec 2007, Ojjus Medicare Pvt Ltd took over the management and it was reorganized as a multi specialty hospital. Currently, Ojjus holds entire 100% stake in the company.
As of November 2011, the hospital has a team of 40 full time doctors, 94 nurses and 47 other medical personnel.
The hospital has installed ‘Perfexion’ – Gamma knife machine - for non invasive treatment. Goodwill is one of the few centers in South and South East Asia to install Gamma Knife machine also called fifth generation machine, which uses robotic technology to deliver precise radiation for treatment.
The Company intends to use issue proceeds for setting up of diagnostic center at Faridabad (Rs 16.22 crore), establishment of six polyclinics (Rs 33.97 crore) and repayment of loans (of Rs 10 crore).
Goodwill Hospital reported a net profit of Rs 4.33 crore on total income of Rs 16.08 crore in the quarter ended June 30, 2011. For the financial year ended on March 31, 2011 - company posted a net profit of Rs 15.72 crore and total income of Rs 53.58 crore, an increase of 471.6% and 134% over previous year, respectively.
RISK FACTORS:
1. Hopeless merchant banker. In the last 2 years, SPA has managed 4 IPOs and the current statuses are as follows:
NAME OF THE COMPANY | ISSUE PRICE | CURRENT PRICE |
INFINITE COMPUTERS | 165 | 61 |
PARABOLIC DRUGS | 75 | 31 |
CANTABIL | 135 | 15 |
SRS LIMITED | 58 | 35 |
2. Funds requirements have not been apprised by any bank / FI, there are no definite plans as the company is yet to receive many approvals. Properties where they are planning polyclinics are not yet identified.
3. The project has already been delayed.
4. Very high debt equity at 3:1.
5. The company had earlier defaulted in payment of lease rental to a group company and there are corporate governance issues.
6. The promoters are non doctors and inexperienced.
VALUATION AND RECOMMENDATIONS:
As IPO was envisaged, the company in the last 3-4 quarters has reported robust numbers. However payment to suppliers and consultant doctors has been delayed which raises doubt on the revenue numbers and margins reported. An expert in the health industry opines, margins reported by the company are not sustainable.
More over the IPO is only to mobilize funds with no definitive plans.
IPOs from health care segment have not rewarded the investors in the past. Some companies like Noida Medicare and Malar hospitals have gone into oblivion. Fortis Health, Indraprastha and Birla pacific Medspa all have disappointed the investors.
INVESTORS CAN GIVE A MISS TO THE IPO.