Sangani Hospitals coming with an IPO to raise up to Rs 15.17 crore

Sangani Hospitals

• Sangani Hospitals is coming out with a 100% book building; initial public offering (IPO) of 37,92,000 shares of Rs 10 each in a price band Rs 37-40 per equity share.
• The issue will open for subscription on August 04, 2023 and will close on August 08, 2023.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 3.70 times of its face value on the lower side and 4.00 times on the higher side.
• Book running lead manager to the issue is Unistone Capital.
• Compliance Officer for the issue is Gaurav Patadia.

Profile of the company

The company is a multi-specialty healthcare provider operating in Keshod and Veraval region of Gujarat. Its services primarily include super specialty services, specialty services and other support services. It also operates pathology laboratory and medical store. Currently, it operates out of two hospitals i.e. Sangani Hospital at Keshod, Junagadh, Gujarat and Sangani Super Speciality Hospital, Veraval, Gujarat. Sangani Hospital is multi-speciality hospital with primary, secondary and tertiary care facilities. It is strategically located near Keshod bus stand. Sangani Super Speciality Hospital is multi-speciality hospital with significant focus on tertiary care facilities. 

Both its hospitals offer a comprehensive range of healthcare services in specialties and super specialties, including cardiac sciences, neurosciences, orthopaedics, renal sciences and mother & childcare. It has provided dialysis facility to many patients and many sessions annually free of cost under the Mukhyamantri Amrutum Yojana (MAA Yojana) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Its team of qualified medical practitioners are trained to handle all kinds of emergencies and ensures that patients get quality healthcare services. Its healthcare staff comprises of Clinical Pharmacist, Microbiologist (DMLT), Medical Officers, Clinical Assistants, Nursing staff, Attendants and Technicians. It strives to deliver advanced healthcare while providing affordable medical services to its patients.

Proceed is being used for:

• Carrying out the capital expenditure for expansion in Sangani Hospital at Keshod, Gujarat.
• Carrying out the capital expenditure for expansion in Sangani Super Speciality Hospital at Veraval, Gujarat.
• General corporate purposes.

Industry overview

The Indian healthcare sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016-22 to reach $372 billion in 2022 from $110 billion in 2016. As of February 20, 2023, more than 220.63 crore COVID-19 vaccine doses have been administered across the country. By FY22, Indian healthcare infrastructure is expected to reach $349.1 billion. India climbed to the 63rd rank among 190 countries in the World Bank’s ‘Ease of Doing Business’ rankings in 2020. 

The Indian pharmaceutical industry ranks third globally in pharmaceutical production by volume and is known for its generic medicines and low-cost vaccines. The sector contributed to around 1.32% of the Gross Value Added (at 2011-12 constant prices) of the Indian Economy in 2020-21. The total annual turnover of Pharmaceuticals in the fiscal year 2021-22 was Rs 3,44,125 crore ($42.34 billion). Major segments of Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars and biologics. India is a global leader in the supply of DPT, BCG, and Measles vaccines. India is one of the biggest suppliers of low-cost vaccines in the world.

In the Economic Survey of 2022, India’s public expenditure on healthcare stood at 2.1% of GDP in 2021-22 against 1.8% in 2020-21 and 1.3% in 2019-20. The Government is planning to increase public health spending to 2.5% of the country's GDP by 2025. Between 2016-22, the market is expected to record a CAGR of 22.52%. The e-health market size is estimated to reach $10.6 billion by 2025. 

Pros and strengths

Focus on under-served areas with dense population: The Company’s hospitals, pathology laboratory, and medical stores are currently located in under-served areas with a dense population, such as Keshod and Veraval. This is in line with the company's mission to deliver advanced healthcare in these areas and improve the healthcare infrastructure. The company recognizes the need for high-quality healthcare services in under-served areas and its presence in these markets provides an opportunity to meet this need.

Growth opportunities in existing facilities and diversification into new services: The Company's strength lies in its ability to leverage on land space and diversification into new services. This is particularly advantageous as hospitals typically have to incur significant capital costs when expanding, mainly for the procurement of land. However, the company has an inherent advantage in expanding its services in the locations it is currently in. In terms of expansion capacity, the company has identified that it can add up to total 100 beds at Keshod Hospital and up to total 80 beds at Veraval Hospital without significant further major investments in infrastructure.

‘Doctor-led’ hospitals driven by skilled and experienced doctors: The Company is led by a team of highly qualified and experienced professionals, including Dr Ajaykumar Sangani, who holds an MBBS, DLO, and MS in E.N.T., Dr Rajeshkumar Sangani, who is an MBBS and MD (Physician), Kamalkumar Sangani, and Dr Vaishali Sangani, who holds MBBS & MD (Obstetrics & Gynaecology). These individuals have been actively involved in the management of the company since inception and have been instrumental in its growth and expansion.

Risks and concerns

Face competition: It competes with other hospitals, clinics and dispensaries of varying sizes with the ability to perform different kinds of services, some or all of which it may or may not be able to offer. Its competitors also include healthcare facilities owned or managed by government agencies and trusts, which may be able to obtain financing or make expenditure on more favorable terms than private healthcare facilities such as it. Its ability to compete in a given market is driven significantly by the extent and depth of diagnosis and procedural capabilities of its competitors and the complexities involved. The healthcare industry is driven by, amongst others, brand value and reputation, including skills of consulting doctors and the abilities of the surgeons.

Dependent on key management personnel: It depends on its current pool of Key Management Personnel to carry out its day-to-day management and overseeing of operations. It also rely on them significantly to plan and execute its growth strategy in the future. The availability of senior management talent in the healthcare industry, especially those with experience in handling hospitals is limited. It may not be able to retain the services of the current management team and could lose talent to competition. Replacement of Key Management Personnel may not be easy, and it may need to wait indefinitely to fill positions until it find suitable candidates. Any significant loss of senior management or key personnel could materially and adversely affect its business and prospects.

Revenue is dependent on inpatient treatment: Its inpatient admissions and treatment contribute significantly to its revenue. 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. If its patients choose to avail inpatient healthcare services from its competitors, instead of availing such healthcare services from it, growth in revenue could stand materially impaired.

Outlook

Incorporated in 2021, the company is a multi-specialty healthcare provider operating in Keshod and Veraval region of Gujarat with a combined bed capacity of 68 beds. its services primarily include super speciality services, speciality services and other support services. On the concern side. It depends on its current pool of Key Management Personnel to carry out its day-to-day management and overseeing of operations. It also rely on them significantly to plan and execute its growth strategy in the future. Any significant loss of senior management or key personnel could materially and adversely affect its business and prospects.

The company is coming out with an IPO of 37,92,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 37-40 per equity share. The aggregate size of the offer is around Rs 14.03 crore to Rs 15.17 crore based on lower and upper price band respectively. On performance front, the company's total revenue for the financial year 2022-23 is Rs 1566.79 lakh. This represents a 52.36% increase compared to the previous financial year's total income of Rs 1028.32 lakh. Profit after tax (PAT) is Rs 148.37 lakh for the financial year 2022-23 as compared to Rs 219.41 lakh in financial year 2021-22. Going forward, the company’s expansion strategies are centred on establishing hospitals which focus on offering quality healthcare services across a spectrum of specialties such as neurology, nephrology, invasive cardiac care, critical care, gastrology and oncology. It intends to continue to strengthen its capabilities in these specialties. To this end, and together with its strategy to expand its hospitals to new geographies, it intends to strengthen its specialties by setting up multi-specialty hospitals which focuses on these specialties.