Shanmuga Hospital Limited, a multispecialty healthcare provider, has launched its IPO as part of its expansion efforts. Based in Salem, this hospital plays a crucial role in catering to the community's medical needs, especially in the nearby regions. It boasts a 151-bed capacity and is equipped with modern healthcare technology to deliver quality medical services. The hospital holds prestigious accreditations from the National Accreditation Board for Hospitals and Healthcare (NABH) and the National Accreditation Board for Testing and Calibration Laboratories (NABL).

IPO Overview

The Shanmuga Hospital IPO is a Fixed Price Issue amounting to ₹20.62 Crores, with a fresh issue of 38.18 Lakh shares. The share price for this IPO has been set at ₹54 per equity share. The market capitalization of the hospital at the IPO price is ₹73.51 Crores. The IPO will be open for subscription from February 13, 2025, to February 17, 2025. The shares will be listed on the NSE SME, with a tentative listing date set for February 20, 2025.

The lot size of the IPO is 2,000 shares, and retail investors need to invest a minimum of ₹1,08,000. High-Net-Worth Individuals (HNIs) must invest a minimum of ₹2,16,000, which amounts to two lots of shares.

Grey Market Premium (GMP) and Subscription Status

As of the latest update, the Grey Market Premium (GMP) of the Shanmuga Hospital IPO stands at ₹8, indicating a potential listing gain of approximately 14.81% based on the current market trends. However, it's important to note that trading in the grey market is unregulated and should be approached cautiously.

As of 1:00 PM on February 17, 2025, the live subscription status shows that the IPO has been subscribed 1.38 times on its final day, which signals a positive demand for the offering. This is a healthy sign, as it suggests investors are actively participating in the IPO.

Shanmuga Hospital's Financial Performance

Shanmuga Hospital's financials exhibit steady growth over the years. Here’s a look at the revenues and profitability for the period ending September 30, 2024, and the previous fiscal years:

• Revenues: ₹2,482.81 Lakh (FY24) compared to ₹4,338.78 Lakh (FY23), ₹3,949.56 Lakh (FY22), and ₹4,147.10 Lakh (FY21).
• EBITDA: ₹463.31 Lakh (FY24), showing a decrease from ₹894.69 Lakh (FY23), but maintaining profitability.
• Profit after Tax: ₹239.29 Lakh in FY24, reflecting a downward trend from ₹526.15 Lakh in FY23 but still positive.

These metrics suggest that while the company has faced some fluctuations in profits, it continues to generate healthy revenue, indicating the viability of its business model.

Valuation and P/E Ratio

Shanmuga Hospital’s pre-issue P/E ratio stands at 10.06x, while the post-issue P/E ratio is 13.97x. The industry average P/E ratio is 22x, which positions the IPO as fairly priced compared to industry standards.

Other key metrics include:

• Pre-issue EPS: ₹5.37
• Post-issue EPS: ₹3.87
• Return on Capital Employed (ROCE): 35.89%
• Return on Equity (ROE): 30.71%
• Return on Net Worth (RoNW): 30.71%

These financial indicators suggest strong profitability and operational efficiency, further supporting the view that the IPO is fairly priced.

Investment Recommendation

Based on the IPO's valuation, financial performance, and Grey Market Premium (GMP), we recommend that risk-tolerant investors consider subscribing to the Shanmuga Hospital IPO. The potential listing gain of 14.81% is an attractive prospect, especially considering the stable growth in the company’s financials and its strategic position in the healthcare sector.

Investors should, however, be aware of the risks associated with smaller, unlisted companies, as market conditions and demand-supply fluctuations may impact the final listing price.

The Upcoming IPOs in this week and coming weeks are Swasth Foodtech, Beezaasan Explotech, HP Telecom India.

The Current active IPO are Royalarc Electrodes, Tejas Cargo India, Quality Power Electrical Equipments, L.K. Mehta, Shanmuga Hospital.

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