Shalby makes weak market debut, ends 3.3% lower than issue price on NSE

MUMBAI: Shares of Gujaratbased Shalby Ltd made a weak market debut on Friday.

The company, which runs a multi-speciality hospital chain, saw its stock close at ₹239.60 on the National Stock Exchange, down 3.3% from the issue price of ₹248.

The issue stock listed opened at ₹239.70.

The initial public offering of Shalby was open for subscription from December 5-7 in a price band of ₹245-248 per share. The ₹504.8 crore share sale was subscribed 2.82 times.

The company will use ₹300 crore of fresh proceeds to retire debt, which will see finance costs shrink by ₹27 crore in fiscal year 2018 (FY18) and make it almost debt free.

A sum of ₹63.58 crore will also be used for purchase of medical equipment for existing, recently set-up as well as forthcoming hospitals, and an additional ₹11.18 crore will also be spent on interiors, furniture and allied infrastructure for upcoming new hospitals.

Shalby’s debt rose to ₹310.9 crore by the first quarter of fiscal 2018, and its debt-to-equity ratio increased to 1.1 from 0.3 in fiscal 2014.

The company’s hospitals are tertiary care providers, a few of which also offer quaternary healthcare services to patients in various areas of specialisation such as orthopedics, complex joint replacement, cardiology, neurology, oncology and renal transplants.

As on date, Shalby provides inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate capacity of 2,012 beds.

Analysts said the issue was offered at a discount compared to its peers.

“At the higher price band of ₹248, its share is available at a price-to-earnings (P-E) multiple of 42.8 times, which is at a discount to the P-E of its peer Apollo Hospitals at 67.7, Narayana Hrudayalaya at 90 and Healthcare Global at 118.4,” said Choice Equity Broking Pvt. Ltd (in a report published on December 1).

Shalby is a fundamentally strong, well-managed company and this issue comes at an attractive valuation, the report added.