Nephrocare Health IPO: Should you apply? Here's what market guru Anil Singhvi thinks

Nephrocare Health IPO: Nephrocare Health Limited launched an initial public offering (IPO) to the tune of Rs 871 crore on December 10. The public offer is a mix of fresh issuance and offer for sale (OFS), and will remain open for subscription till December 12.

Nephrocare Health IPO details

The Nephrocare Health IPO is a book-building issue of Rs 871 crore, comprising the fresh issuance of 0.77 crore equity shares, worth Rs 353.4 crore, and an offer-for-sale (OFS) of 1.13 crore equity shares, worth Rs 517.64 crore.

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Out of the total offer, while 50 per cent is reserved for qualified institutional buyers (QIBs), 15 per cent is set aside for non-institutional investors (NIIs) and the remaining 35 per cent for retail individual investors (RIIs).

During the book-building process, bids can be placed for 32 shares at a time, translating to a lot size of 32 units. This means participants need to shell out up to Rs 14,720 per lot (at the upper end of the price band).

Nephrocare Health IPO price band

Nephrocare Health has priced its public offer at Rs 438 to Rs 460 per equity share, marking a valuation of around Rs 4,615 crore.

Nephrocare Health IPO subscription date

The public offer of Nephrocare Health will remain open for public subscription from December 10 to December 12.

Nephrocare Health IPO allotment date

The basis of allotment of the IPO shares is expected to be finalised tentatively on December 15, which will be followed by the crediting of shares to the successful subscribers and initiation of refunds to the unsuccessful bidders.

Nephrocare Health IPO listing date

The IPO stock is likely to list on stock exchanges NSE and BSE tentatively on December 17.

Nephrocare Health Ltd company profile

Nephrocare Health Services Ltd. is a provider of comprehensive dialysis care through a large number of its clinics situated across the country as well as in some international markets. The range of services that it provides includes diagnosis, haemodialysis, home and mobile dialysis and wellness programs. The services are backed by an in-house pharmacy.

Market guru Anil Singhvi's take on Nephrocare Health IPO

Zee Business Managing Editor Anil Singhvi has shared his views on the Nephrocare Health IPO, highlighting a few key positives and negatives, including:

Key positives

• A major strength is its direction by experienced, well-qualified promoters
• With more than 50 per cent of the Indian market share, it is the leading dialysis provider in the country, holding a dominant position and creating high entry barriers for competitors.
• It is the largest in Asia and the fifth-largest dialysis chain worldwide, aided by its powerful hold in India and five other countries
• The asset-light model, along with efficient operations, is the other factors contributing to scalability since the company can grow without incurring heavy capital costs
• Big-name investors during the pre-IPO and anchor books adds weight to the company’s governance and long-term prospects
• The company seems to be fundamentally strong in terms of its impressive growth track record, strong cash flows, and improving operating performance and profitability
• Valuations, on an EV/EBITDA basis, appear to be reasonable

Key negatives

A substantial portion of the company’s revenue is derived from public-private partnership (PPP/PPT) contracts and government-linked income, making it susceptible to policy-related uncertainties

The company relies majorly on business from clinics in private hospitals, which may create operational dependency and limit pricing flexibility

Pricing for dialysis services is often fixed under healthcare agreements; this can restrict margin expansion even if operational costs rise

Should you apply?

Overall, despite these risks, Singhvi noted that Nephrocare presents a strong business model backed by absolute market leadership and strong growth prospects.

He suggests investors apply for the long term, highlighting the potential for the stock to double in 2-3 years.