Aashka Hospitals coming with an IPO to raise upto Rs 102 crore

Aashka Hospitals

• Aashka Hospitals has come out with an initial public offering (IPO) of 8400000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 121 per equity share.
• The issue will open for subscription on August 10, 2021 and will close on August 13, 2021.
• The shares will be listed on SME Platform of BSE.
• The share is priced 12.10 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Fedex Securities.
• Compliance Officer for the issue is Kamleshbhai Patel.

Profile of the company

The company is certified by National Accreditation Board for Hospitals and Healthcare Providers (NABH Accredited) for tertiary and apical care level hospital in Gujarat. It is an integrated healthcare service provider, committed to deliver quality healthcare services to its patients in modern facilities that includes prevention, best treatment and proper rehabilitation. The company decided to step-up its support in the fight against COVID-19 and was a designated COVID-19 treatment hospital. With the support of its doctors and staffs, it has treated more than 2000 COVID-19 patients. The company is a growing organization that aims at strengthening and establishing itself as the foremost healthcare services provider. It strives to serve with its ultra-modern medicinal practices and state of the art infrastructure for medical as well as surgical care solutions.

The company has a team of medical practitioners who ensures that patients get the quality healthcare services. Its dedicated team is trained to take care of the patients and handle all kinds of emergencies. Its healthcare staff members comprise of Medical Director, Quality Manager, Clinical pharmacist, Microbiologist, Medical Officers, Clinical Assistants, Infection Control Nurse, Nursing staff, Attendants, Technicians, Dietician/Nutritionist, Medical Transcriber, Biomedical Engineers. It is associated with Companies, Organization, University and Institute for providing regular healthcare check-up facilities to their employees and their Post-Graduation Students at affordable rates. It has entered into Memorandum of Understanding with Blood Banks like Shraddhadeep Blood Bank and Sanjivani Blood Bank (Vol.) and Apheresis Centre from whom it procure blood and blood components to the meet the needs of patients admitted at its hospital. Also, it has associations and affiliations with major Insurance Companies that processes insurance claims admissible under the Mediclaim policy for its patients.

Proceed is being used for:

• Repayment / prepayment, in full or part, of certain borrowings availed by company.
• Funding of inorganic growth initiatives.
• General corporate purposes.

Industry overview

Healthcare has become one of India’s largest sector, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players. Indian healthcare delivery system is categorized into two major components public and private. The Government, i.e., public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. Several factors are driving the growth of the Indian healthcare sector including an aging population, a growing middle class, the rising proportion of lifestyle diseases, an increased emphasis on public-private partnerships as well as accelerated adoption of digital technologies, including telemedicine, besides heightened interest from investors and increased FDI inflows over the last two decades.

India’s healthcare industry comprises hospitals, medical devices and equipment, health insurance, clinical trials, telemedicine and medical tourism. These market segments are expected to diversify as an ageing population with a growing middle class increasingly favours preventative healthcare. Moreover, the rising proportion of lifestyle diseases caused by high cholesterol, high blood pressure, obesity, poor diet and alcohol consumption in urban areas is boosting demand for specialised care services. Indian healthcare sector is expected to reach $193.83 billion by 2020. Rising income level, greater health awareness, increased precedence of lifestyle diseases and improved access to insurance would be the key contributors to growth. Health insurance is gaining momentum in India. Gross direct premium income underwritten by health insurance grew 17.16% y-o-y to Rs. 51,637.84 crore ($ 7.39 billion) in FY20. According to Economic Survey 2020-21, the health insurance industry experienced increasing insurance coverage in FY20.

Pros and strengths

Well diversified and specialty service offerings: The company’s operations encompass various levels of healthcare services from primary to tertiary and position it to be a one- stop destination for patients’ needs once they enter its hospital. In addition to providing core medical, surgical and emergency services, it also offer advanced surgical treatments in various specialties, including cardiology, oncology, radiology, neurosciences, paediatrics, gastroenterology, orthopaedics and critical care services. It is investing significantly in the technology, equipment and infrastructure required to perform the most advanced procedures and to strengthen its specialty focus.

Provision of quality healthcare services: Since the company commenced operations in 2015, it has been focused on providing quality healthcare service. It constantly strive for a high standard of clinical excellence at its hospital. It follow well-defined quality and patient safety protocols in patient handling and care. Further, its hospital offer a wide range of advanced medical care and emergency services, including cardiology, oncology, neurosciences, paediatrics, gastroenterology, orthopaedics, critical care services and allied services such as radiology. Its focus on quality is evidenced by the quality certifications and accreditations that its facility has obtained from various local agencies. Its multi-specialty hospital received accreditation by the NABH.

Ability to attract, train and retain quality doctors: The company maintain its standard of quality healthcare by consistently employing a diverse pool of talented doctors, nurses and paramedical professionals. Its multi-disciplinary approach, combined with its cost for treatment, a tertiary care model, has helped it attract and retain high quality doctors and other healthcare professionals. Many of its specialists, physicians and surgeons have been trained in premier medical institutions.

Risks and concerns

Highly dependent on doctors, nurses and other healthcare professionals: The company’s performance and the execution of its growth strategy depend substantially on its ability to attract and retain leading doctors and other healthcare professionals. It complete for these personnel with other healthcare providers. The market for doctors is highly competitive and there is a general shortage of doctors in India. The factors that doctors consider important before deciding where they will work include the level of compensation, the reputation of the hospital and its owner, the quality of the facilities, research opportunities and community relations. It may not compare favorably with other healthcare providers on these factors. Many of these healthcare professionals are well- known personalities in their fields and regions with large patient bases and referral networks, and it may be difficult to negotiate favourable terms and arrangements with them.

Revenue primarily dependent on inpatient treatments: The company’s inpatient admissions and treatment contribute significantly to its revenue, compared to its outpatient consultative care. In the event there is a decline in the number of inpatients serviced by it, its financial condition and results of operations will materially stand impacted. This apart, in markets where it has an established presence, if its patients choose to avail inpatient healthcare services from its competitors, instead of availing such healthcare services from it, its growth in revenue could stand materially impaired.

Generate revenue from government sponsored health schemes: The company provide medical services under various government schemes. Government schemes are an important source of new patient registrations and revenue for it. As a result, if the applicable tariffs specified in the agreements with government payers are revised downwards, or if the extent of coverage or limits are reduced, or if the payment terms are made longer, or if the reimbursement policies are changed in the agreements with the government payers, or if the government payers terminate their agreements with it, its number of new patient registrations will decline and its revenue and profitability could be negatively affected.

Outlook

Incorporated in 2012, Aashka Hospital, the Gujarat-based hospital is an integrated healthcare service provider that offers the best quality of healthcare facilities including prevention, best treatment, and rehabilitation. It serves a range of healthcare services i.e. Cardiology, neurology, neurosurgery, nephrology, anesthesiology, orthopedics, pediatric services, neonatology services, dermatology, radiology, dentistry, obstetrics, and gynecology, and more. It is a part of Ayushman Bharat, a flagship scheme of Government of India which was launched and recommended by the National Health Policy 2017, to achieve the vision of universal health coverage (UHC). It has a team of medical practitioners who ensures that patients get the quality healthcare services. Its dedicated team is trained to take care of the patients and handle all kinds of emergencies. It is associated with Companies, Organization, University and Institute for providing regular healthcare check-up facilities to their employees and their Post-Graduation Students at affordable rates. On the concern side, the company source its equipment and supplies from third party suppliers under various arrangements. Any failure to procure equipment, reagents or drugs on a timely basis, or at all, from such third parties and on commercially suitable terms could affect its ability to provide its services. It may also be unable to find alternative service providers in time, or at all, and at a suitable cost. Besides, its existing insurance may not be sufficient to cover all damages, whether foreseeable or not. As a result, any successful claims against it in excess of the insurance coverage may adversely affect its business, reputation, financial condition, results of operations, cash flows and prospects.

The company is coming out with an IPO of 8400000 equity shares of Rs 10 each at a fixed price of Rs 121 per equity share to mobilize Rs 101.64 crore. On the performance front, the total income from operations for the FY 2021 was Rs 4068.88 lakh and it was Rs 2722.82 lakh during the FY 2020. The company increased its revenue in the year FY 2021 by 99.99%. Profit after Tax (PAT) increased from Rs 137.91 lakh for the FY 2020 to Rs. 411.39 lakh in FY 2021. The profit after tax was increased by 198.32% as compared to FY 2020 on account of increase in total revenue. The company aims to continue to be one of the leading healthcare service providers in India through strategic acquisitions and O&M arrangements with third party healthcare service providers. Towards this, it intends to strengthen its hospital presence in the state of Gujarat. Every opportunity for expansion is viewed against the background of various factors such as local demography, catchment area served, gentry and spending capacity, growth rate of population, patient flow, availability of local partners, location of the property, expected investment, financial returns, local competition, and the availability of local talent.