Maitreya Medicare coming with IPO to raise upto Rs 14.89 crore

Maitreya Medicare 

• Maitreya Medicare is coming out with an initial public offering (IPO) of 18,16,000 shares of Rs 10 each in a price band Rs 78-82 per equity share.  
• The issue will open for subscription on October 27, 2023 and will close on November 1, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 7.80 times of its face value on the lower side and 8.20 times on the higher side.
• Book running lead manager to the issue is GYR Capital Advisors.
• Compliance Officer for the issue is Payal Mathur.

Profile of the company

Maitreya Medicare (MML) is a 125 bedded, Multi Superspeciality hospital incorporated in the year 2019 based out in Surat, Gujarat. The company provides multi disciplinary integrated healthcare services, with a focus on primary secondary & tertiary care. It offer a comprehensive range of healthcare services across over 18 specialities and super specialities, including Cardiology, Urology, Oncology, Laparoscopic Surgery, Neurology, Neurosurgery, Spine Surgery, Nephrology including Dialysis, Gastroenterology, Gastrointestinal surgery, Cardiothoracic Surgery, Oncosurgery, Orthopedic Surgery including joint replacements and Arthroscopic surgeries, Gynecology & High-Risk Obstetrics, Hepatocellular Billary Surgery, Critical Care Medicine etc.

The company strives to provide quality service to more patients and it has scope for additional patients and improved occupancy rates. The company strategically focuses on the southern Gujarat healthcare market where it has a strong understanding of regional nuances, customer culture and the mind set of medical professionals and where there is a growing need for quality and affordable healthcare services. Its hospital also has integrated diagnostic services and pharmacies that cater to its patients.

The company follow a ‘patient first’ ideology by creating the good infrastructure with thrust on service delievery to all its stake holders, be it patient, staff or doctors, technology and support to put patient-first and foremost and be futuristic and innovative in the delivery of healthcare services. Patients are the key stakeholders in the healthcare industry everything revolves around patients’ comfort, their convenience in all respects should always be maintained. This unit has the potential to expand further by 75 beds to make it 200 bedded structure with quaternary care facilities like Organ Transplants, Robotics etc in near future. Its hospital is located in densely populated micro market with a low presence of good-quality hospitals, which provides it an opportunity to offer its services to a larger population and help its patients with greater access and connectivity to healthcare services. Its hospital being a full service hospital, operates independently serving the healthcare needs of patients, right from diagnostics to surgery and rehabilitation. It focuses on promoting and maintaining a culture that encourages the retention and growth of its healthcare professionals also. 

Proceed is being used for:

• Making investment through Equity in the subsidiary named ‘Maitreya Hospital Private Limited’ for setting up Hospital at Valsad, Gujarat.
• Redemption of part of issued Non-Convertible Redeemable Preference Shares.
• Working Capital requirements of the company.
• General Corporate Purposes.

Industry overview

Healthcare has become one of India’s largest sectors, 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 as private players. India’s 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 centers (PHCs) in rural areas. The private sector provides the majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, 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 low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

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. By FY22, Indian healthcare infrastructure is expected to reach $349.1 billion. In the Economic Survey of 2022, India’s public expenditure on healthcare stood at 2.1% of GDP in 2021-22 against 1.8% in 2020-21 and 1.3% in 2019-20. In FY22, premiums underwritten by health insurance companies grew to Rs 73,582.13 crore ($ 9.21 billion). The health segment has a 33.33% share in the total gross written premiums earned in the country. The Indian medical tourism market was valued at $2.89 billion in 2020 and is expected to reach $13.42 billion by 2026. According to India Tourism Statistics at a Glance 2020 report, close to 697,300 foreign tourists came for medical treatment in India in FY19. India has been ranked 10th in the Medical Tourism Index (MTI) for 2020-21 out of 46 destinations by the Medical Tourism Association. The e-health market size is estimated to reach $ 10.6 billion by 2025. 

Pros and strengths

Ability to attract and retain skilled and experienced healthcare professionals: The company maintains its standard of quality healthcare services by consistently employing a diverse pool of talented healthcare professionals including doctors and nurses. Its multi-specialty approach, combined with its ‘patient first’ ideology, long-standing presence in South Gujarat, and investment in medical technology and excellence in services, has helped it in attracting and retaining skilled and experienced healthcare professionals. 

‘Doctor-led’ hospitals driven by skilled and experienced doctors in the healthcare space: Doctor funded hospital and run by doctors are always having upper edge in terms of professional expectation of a doctor to satisfy his patient. That is the motto which it carried and founded its deam baby. The company at Maitreya in professional flexibility for the clinical benefit of patient irrespective of their socioeconomic status. Sometimes management tries to guide the professional by rules without exception and professional needs it in exceptional cases to give clinical result to patients and to serve the huminity which it saw during COVID times too. 

Focus on under-served areas with dense populations and presence in tier-2 and tier-3 cities: From the inception of the company, it is extremely focused on which market to serve and enjoy market leadership in that particular area. Therefore, it is focused in the South Gujarat area as its Promoters, its team of doctors and medical professionals have reach over customer base in the said area. As the company is led by doctors and ‘patientfirst’ approach, therefore it helps to gain market share in tier-2 and tier-3 cities. 

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 competes 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. Its performance also depends on its ability to identify, attract and retain other healthcare professionals, including nurses, to support the multi-speciality practices at its hospital.

Depends on certain field of specialty for substantial portion of revenue: While the company’s hospital provides multi-speciality services, it derives a substantial portion of its revenue from its cardiology, neurosciences, orthopedics and general medicine services. For the Fiscal 2023, its revenue contributions from these services were 46%, 9%, 5% and 25% respectively of its revenue from operations, respectively. Thus, its financial conditions and results of operations are dependent on its revenue from these fields. Due to its dependence on the field of cardiology, neurosciences and general medicine services, a number of factors could cause material fluctuations or decline in its revenue. These factors could include its inability to use modern technology and infrastructure while undertaking surgeries and procedures in these fields or the innovation and implementation of modern techniques by other hospitals which it is unable to implement, a decrease in the number of new patients registered, a loss of key experienced medical professionals, liabilities on account of medical negligence, or regulatory changes. A decline in its revenue from these fields could materially and adversely impact its business, prospects, financial condition and results of operations.

Rely on the limited number of suppliers: The company relies on the limited number of suppliers for purchasing of medicines and consumables, which in turn, rely on third-party suppliers for sourcing of products. The contribution of its top five suppliers in its purchase of medicines and consumable items as a percentage of the total purchase during Fiscal 2023, 2022 and 2021 is 2.61%, 1.88% and 1.84% respectively. Its reliance on a limited number of suppliers for its business exposes it to risks, that may include, but are not limited to, reductions, delay or failure on the part of its suppliers to deliver products in a timely manner, deterioration in the financial condition or business prospects of these suppliers, failure to negotiate favourable terms with its key suppliers, all of which could have a material adverse effect on the business, financial condition, results of operations and future prospects of the company.

Outlook

Maitreya Medicare is a multi-speciality hospital situated in Surat, Gujrat. The main focus of the hospital is multi-disciplinary integrated healthcare services, with primary secondary & tertiary care. Maitreya Medicare offers a comprehensive range of healthcare services across over 18 specialties and super specialties, including Cardiology, Urology, Laparoscopic Surgery, Oncology, Neurosurgery, Spine Surgery, Neurology, Nephrology including Dialysis, Gastroenterology, Gastrointestinal surgery, Cardiothoracic Surgery, Oncosurgery, Orthopedic Surgery including joint replacements and Arthroscopic surgeries, Gynecology & High-Risk Obstetrics, Hepatocellular Billary Surgery, Critical Care Medicine, etc. On the concern side, the company operates in a competitive environment. In most markets, it competes with hospitals, clinics, diagnostic chains and dispensaries of varying sizes with different specialties. Besides, the company’s business requires significant amount of working capital and major portion of its working capital is utilized towards trade receivables.

The issue has been offered in a price band of Rs 78-82 per equity share. The aggregate size of the offer is Rs 14.16 crore to Rs 14.89 crore based on lower and upper price band respectively. On performance front, the total income of the company for fiscal year 2023 was Rs 3,99,490.74 thousands against Rs 4,97,440.68 thousands total income for Fiscal year 2022. A decrease of 19.69% in total income. Profit after tax for the Fiscal 2023 was at Rs 42,264.88 thousands against profit after tax of Rs 11,363.10 lakh in fiscal 2022, a 271.95% increase. Meanwhile, the company intends to leverage its brand, clinical and operational expertise to continue to attract healthcare professionals and aim to continue to develop long-term relationships with them. The company aims to adopt the required medical technologies and equipment to provide better treatment for its patients with cost effective rationale and that by incorporating such new technologies into its operations, it will be able to improve patient care, expand the scope of treatments that it offers and increase affordability, efficiency, and cost savings.