Shanmuga Hospital, a prominent multispecialty healthcare provider in Salem, saw its shares hit the 5% lower circuit limit shortly after its listing on the BSE SME platform. The IPO was priced at ₹54 per share, and despite early enthusiasm, investors faced a potential loss of ₹5,400 per lot.

The IPO, which opened for subscription on February 13, 2025, and closed on February 17, 2025, was fully subscribed 2.43 times on the final day, signaling strong initial demand. However, the flat listing on the BSE SME platform raised concerns among investors about the stock’s future performance.

With Shanmuga Hospital IPO priced at ₹54 per share and the lot size of 2,000 shares, the minimum investment per retail investor amounted to ₹1,08,000. After the listing, the stock dropped to ₹51.3 per share, reducing the lot value to ₹1,02,600, thereby causing a loss of ₹5,400 per lot.

Grey Market Premium and IPO Expectations

Before listing, the Grey Market Premium (GMP) for the Shanmuga Hospital IPO stood at ₹8, indicating an expected listing price of ₹62 per share. However, the actual listing price failed to meet expectations, with the stock opening flat and experiencing immediate downward movement.

The GMP is often used by investors as an informal gauge for expected listing gains, but it is important to note that the GMP can be speculative and does not always correlate with actual market performance once shares are listed.

Financial Performance and Market Capitalization

At the IPO price of ₹54 per share, Shanmuga Hospital had a market capitalization of approximately ₹73.51 crores. The company has shown steady growth in its financial performance over the past few years, with revenues from operations of ₹2,482.81 lakh for the fiscal year ending September 2024.

The profit after tax (PAT) for the fiscal year ending September 2024 stood at ₹239.29 lakh, marking a stable profit margin despite challenges in the healthcare sector.

IPO Use of Proceeds and Objectives

Shanmuga Hospital plans to utilize the proceeds from its ₹20.62 crores IPO for two primary objectives:

1. ₹1,452.50 lakh for purchasing additional medical equipment to further improve healthcare services.
2. ₹383.28 lakh for general corporate purposes, including operational enhancements.

These investments are expected to help the hospital scale its capabilities and improve the quality of service, aligning with its goal of strengthening healthcare infrastructure in Salem and surrounding regions.

Shanmuga Hospital’s Strategic Vision

Shanmuga Hospital, accredited by both the National Accreditation Board for Hospitals (NABH) and National Accreditation Board for Testing and Calibration Laboratories (NABL), has a strong reputation for high-quality healthcare services. The hospital, with a 151-bed capacity, serves a wide range of medical needs in the community, including prevention, treatment, and rehabilitation.

The hospital is led by a team of experienced healthcare professionals, with a focus on expanding its services and integrating advanced healthcare technologies to cater to the growing medical needs of the region.

IPO Performance and Investor Sentiment

Despite the flat listing and lower circuit hit, the Shanmuga Hospital IPO was seen as a potential opportunity for investors looking for listing gains based on the company’s promising financial performance and solid healthcare credentials. However, with the stock hitting the lower circuit, investors now face questions about the IPO's long-term performance and potential for future growth in the healthcare sector.

As of now, the Shanmuga Hospital IPO serves as a cautionary tale for investors in the SME segment, where stock performance can be volatile and difficult to predict post-listing.

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