Vaidya Sane Ayurved Laboratories coming with an IPO to raise upto Rs 20 crore

Vaidya Sane Ayurved Laboratories

• Vaidya Sane Ayurved Laboratories (Madhavbaug) has come out with an initial public offering (IPO) of 27,71,200 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 73 per equity share.
• The issue will open for subscription on February 10, 2022 and will close on February 15, 2022.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 7.30 times higher to its face value of Rs 10.
• Book running lead manager to the issue is First Overseas Capital.
• Compliance Officer for the issue is Abhishek Ajay Deshpande.

Profile of the company

The company is a unique medical service institution that strives to treat chronic ailments like cardiac disease, diabetes, hypertension and obesity with the distinctive outlook of amalgamating technology with traditional healing of Ayurveda. The company’s approach to treatment using non-invasive, multidisciplinary and innovative therapies which has helped establish it as a dependable option for treating the chronic ailments. It is a health care provider primarily in the India’s chronic care ecosystem. It provides its healthcare services through Madhavbaug clinics. As on November 30, 2021, the company operates 274 clinics across Maharashtra, Madhya Pradesh, Gujarat, Uttar Pradesh, Goa, Karnataka, Delhi and Chhattisgarh. Out of these 52 are company owned and 222 are franchise clinics. It also operates two cardiac prevention and rehabilitation hospitals in Khopoli and Nagpur respectively. Currently, the company’s network includes 274 Clinics and 2 Fully equipped Hospital.

At the company’s clinics and hospitals, it use modern diagnostics, diet and physiotherapy and advanced Ayurveda to provide Heart disease, Diabetes, Hypertension & Obesity reversal treatments to its patients. This helps in improving the exercise tolerance of patients - improvement in grade of symptoms, improvement in maximum oxygen uptake, reduction in Hba1c, and metabolic equivalents (METs).

Proceed is being used for

• Funding Branding and Advertising expenses.
• 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 categorised 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. The private sector provides majority of secondary, tertiary, and quaternary care institutions with major concentration in metros and tier I and tier II cities. India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.

The healthcare market can increase three-fold to Rs. 8.6 trillion ($133.44 billion) by 2022. In Budget 2021, India’s public expenditure on healthcare stood at 1.2% as a percentage of the GDP. A growing middle-class, coupled with rising burden of new diseases, are boosting the demand for health insurance coverage. With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years. In FY21, gross direct premium income underwritten by health insurance companies grew 13.3% YoY to Rs. 58,572.46 crore ($7.9 billion). The health segment has a 29.5% share in the total gross written premiums earned in the country.

Pros and strengths

Combination of modern healing methods and ancient natural practices: Most organizations either adopt modern healing methods or ancient natural practices, but the company has stood out by creating a successful concoction of the two. Its diagnostic methods are backed by the latest technological equipment, while its therapy methodology is deep-rooted in Ayurvedic treatment methods. The treatments offered by Madhavbaug are natural, non-invasive, affordable and suitable for almost everyone. These come as a boon for the people who are unable to undergo surgery due to health complications and/or financial constraints.

Affordable treatments: The first and foremost goal of Madhavbaug is to reduce the cardiovascular health related burden and improve the overall health of society. The affordable and non-invasive nature of its treatments makes them accessible to all sections of society, enabling even those with meager means to get help for their condition.

Technology driven: The company has an in-house IT platform which has helped the company increase its efficiency by coming up with innovations. It also has a training app which helps Core Medical Team to interact with on ground team of doctors & therapists on a daily basis.

Risks and concerns

Growth into new geographic areas exposes company to certain risks: The company intends to expand its presence both geographically and in terms of number of clinics. Metros and fast developing smaller towns are currently under-served and give a greater scope for its services. Presently its presence is largely in and around Mumbai. Its proposed business plan seeks to extend its outlets to other parts of India including non-metro cities and towns. Pursuance of such a growth strategy may expose it to risks which may arise due to lack of understanding / economic conditions and culture of these areas. If the company is not able to manage the risk of such expansion it could have a material adverse affect on its operations.

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 services. 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 services 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.

Business highly dependent on consumer spending patterns: Madhavbaug is a unique medical service institution that strives to treat cardiac disease, diabetes, hypertension and obesity with the distinctive outlook of amalgamating technology with traditional healing. The company is in the business of wellness and healthcare. The growing middle and upper class of Indian population is its main target business segment. Hence its business is highly dependent on their spending pattern which again depends on the general economic conditions in the country and the surplus available with consumers for spending on matters of wellness and healthcare, especially ayurveda. Any slow-down in the economic activity of its country will adversely affect the consumer surplus available for spending towards wellness and healthcare.

Outlook

Vaidya Sane Ayurved Laboratories is a medical service institution engaged in the treatment of chronic ailments like cardiac disease, diabetes, hypertension, and obesity by combining modern technology with the traditional Ayurveda practices. It uses non-invasive, multidisciplinary, and innovative therapies for treating chronic ailments. The company mainly offers treatment for Health disease reversal, Diabetes Reversal, BP Management, Obesity management, Knee pain relief.  The company use clinic based health care delivery model along with tele-medicine to ensure easy accessibility to patients. The clinics don’t require heavy capital expenditure thus the model can be easily scaled thereby increasing penetration. At its clinics and hospitals, it use modern diagnostics, diet and physiotherapy and advanced Ayurveda to provide Heart disease, Diabetes, Hypertension & Obesity reversal treatments to its patients. This helps in improving the exercise tolerance of patients - improvement in grade of symptoms, improvement in maximum oxygen uptake, reduction in Hba1c, and metabolic equivalents (METs). On the concern side, the company’s profitability is affected by its ability to achieve favorable pricing on its medical consumables, pharmacy items and medical equipment from its suppliers, including through negotiations for supplier rebates. Its business operations require it to obtain and renew from time to time, certain approvals, licenses, registrations and permits, some of which may expire and for which it may have to make an application for obtaining the approval or its renewal.

The company is coming out with a maiden IPO of 27,71,200 equity shares of Rs 10 each at a fixed price of Rs 73 per equity share to mobilize Rs 20.23 crore. On the performance front, total income decreased by 30.57% to Rs 5227.92 lakh for Fiscal 2021 from Rs 7529.73 lakh for Fiscal 2020, primarily due to decrease in overall business and revenue as a result of Covid 19 pandemic and resultant lockdowns.  The company’s profit for the year increased by 377.64% to Rs 154.70 lakh for the financial year 2021 from loss of Rs 55.72 lakh for the financial year 2020. As a part of the company’s future growth strategy, it proposes to expand and strengthen its existing clinic network. It will position new clinics in strategic locations in Maharashtra and expand Clinic Network in Madhya Pradesh, Uttar Pradesh and Gujarat. It further intends to Open Franchisee OPD clinics in Tier II & III cities to increase reach. It further plans to expand Khopoli and Nagpur Hospitals.