Pankaj Sahni, Group CEO, Medanta, in dialog with ET Now because the Global Health IPO kicked off on Thursday.
At a time when there are 8-9 listed hospital corporations in India. What is so completely different about your hospital and why ought to our viewers spend money on it?
Dr Naresh Trehan: Medanta was created to deliver to India and the encircling nations, an establishment equal to Mayo clinic, Cleveland Clinic, Harvard the place that mannequin is on the identical platform. All the specialities are led by leaders who’re benchmarked world wide and the collective energy of all these folks culminate in a really sturdy supply system which sufferers can get a lot better outcomes from as a result of the platform lends itself to collective remedies.
That is why this was introduced and we constructed 2.7 million sq ft in Gurugram and put the methods in place which represented that commonplace whether or not in bodily construction, expertise and in addition human capital. The medical doctors who joined us had been leaders benchmarked world wide and not solely in India. So with that collective energy of giant expertise, the medical doctors had been working collectively full time and we had been in a position to produce outcomes.
Within the primary 15 months of opening, we broke even in Gurugram. It was an enormous funding. It was the primary time that such a big hospital of 1,300 plus beds was created within the non-public house. Then we additionally had the energy to take the following step and had been in a position to pay again all our debt or loans inside six years which had been truly 12-year loans. So our efficiency was very sturdy. Not solely financially but additionally our methods and protocols grew to become so sturdy that we felt the consolation that we are able to take this to different underserved areas and we did.
The first was a 1,000-beds hospital in Lucknow to serve 200 million folks in UP the place this sort of commonplace did not exist. Then the following step was Patna; once more serving 130 million folks devoid of this sort of healthcare. Lucknow has 1000 beds and Patna 650 beds and we are actually constructing a brand new one in Noida, which once more has a really massive inhabitants.
So Medanta represents that system the place folks full-time work collectively as groups quite than people and the top result’s far superior and most complex circumstances get one of the best therapy. We have finished all of the excessive finish stuff like coronary heart transplants, liver transplants, kidney transplants, robotics. We truly created robotic kidney transplants and are at all times on the innovative. We are actually beginning lung transplants. All these items are beneath one roof and they’re additionally replicated as a result of these methods and protocols have been replicated throughout the entire system.
We have two smaller hospitals in Ranchi and Indore. Growth is coming very quickly from our hospitals and that’s the reason we consider that we now have a system which works, which supplies aid to the inhabitants round it and has represented India. Newsweek International has named us one of the best non-public hospital on this a part of the world three years in a row.
Currently your market cap is on the upper finish at about Rs 9,000 crore. How have you ever priced the IPO? Have you used the business as a benchmark or have you ever used your money flows and your progress as a benchmark to reach at this valuation as a result of one is absolute, second is relative?
Pankaj Sahni: For our valuation and pricing train, we now have spoken to nearly 100 institutional buyers throughout India and internationally. Look on the high quality of a few of our anchor buyers. There are main sovereign funds like
from the Government of Singapore. We have nearly all main mutual funds in India in our anchor guide – roughly 12 or 13 mutual funds are represented in our anchor guide. Leading institutional buyers from varied elements of the world are there as properly.
We have engaged with a number of the institutional buyers, bankers and engaged with our board of administrators and our shareholders to reach at what we consider is a good value for this IPO. It is priced at Rs 336 on the prime finish of the band and as you rightly identified, if you take a look at a number of the matrix which come out from the valuations and from the multiples, you evaluate these with what’s prevailing and also you will discover very clearly see why we consider that it is a truthful value. We are very assured in regards to the alternatives for progress which might be to return for us in Medanta each within the brief, medium and long run.
Growth is not solely coming from our mature amenities which proceed to do properly particularly during the last couple of years, even if you evaluate FY2020 to FY2022, even if you happen to low cost the Covid yr or FY2021, once we noticed a CAGR of about 20% yr on yr on our revenues. We have very sturdy EBITDA margins and we now have good efficiency throughout the board and that is regardless of a number of the challenges we face with worldwide persistence.
Even extra thrilling is the truth that a number of the progress that we now have seen in our new property, our Lucknow facility at the moment is at about 500 beds, our Patna facility, which began in January of this yr roughly has 300 beds and each these property are performing very properly.
Our Lucknow facility is in actual fact performing exceptionally properly, already producing about 28% EBITDA margins in monetary yr 2022 and was EBITDA breakeven in its first full yr of operations regardless of a number of the challenges with COVID. So we really feel very assured in regards to the prospects and the alternatives that we now have and with Noida approaching board as properly, setting ourselves up not only for the present interval but for progress in the long term as properly.
What sort of response have you ever bought out of your anchor buyers as a result of simply trying on the valuation that you simply simply talked about, it’s engaging but it can’t be known as low-cost?
Pankaj Sahni: The response from our anchor buyers has been overwhelmingly optimistic. You will be capable to discover a number of the names which might be represented in that guide. When you take a look at let the home aspect, there are nearly 13 mutual funds – all of the main mutual funds within the nation are a part of the anchor guide, in actual fact probably much more, need to subscribe that we may not accommodate given the dimensions restrictions within the anchor guide so on the home aspect.
There was phenomenal response from all of the main mutual funds, main life insurance corporations as properly represented in our anchor guide.
On the institutional aspect additionally we now have acquired a really optimistic response. Lots of sovereign funds collaborating within the anchor guide. We have healthcare particular funds collaborating within the anchor guide from all the world over. We have worldwide funds which have a really sturdy investing expertise in India throughout sectors collaborating within the anchor guide.
There was an issue of a lot for our firm by way of the anchor guide. We had a really lengthy checklist of individuals desirous to take part in a really vital method by way of the dimensions. We have finished our greatest to make sure that we get a good illustration throughout Indian and worldwide institutional buyers. So, we now have a really sturdy anchor guide by all accounts. When you take a look at our pricing, as I discussed, take a look at our monetary efficiency, our EBITDA margins, income progress amd the expansion trajectory as properly. We really feel pretty assured. Our firm, our board, bankers together with our institutional buyers labored to reach at a value that may be very affordable.
You are a number one heart specialist who can be donning an entrepreneurial hat. How are you going to maximise returns for shareholders whereas remaining a necessary service ensuring it’s reasonably priced for the bigger good of humanity?
Dr Naresh Trehan: I will say that good medicine will make good business but good business does not make good medicine. So you by no means lose sight of your core purpose, which is to ship the very best finish of healthcare that may be supplied wherever on the planet on the most reasonably priced costs in order that increasingly folks can truly profit from it. The third is the integrity of medicine must be maintained at all times.
So if you happen to stick to those three core values, then sufferers will search you out. So with that core worth,.one can see the expansion that has occurred.
Coming again to the IPO, the opposite higher value band you might be quoting a PE of about 43, which is decrease than the business common of about 50 plus. A really aware resolution?
Pankaj Sahni: Like I discussed earlier we now have finished our value banding along with our bankers, board of administrators and in addition a few of our present institutional buyers in addition to the buyers that we engaged with prior to now. You will see in our RHP that a number of the buyers had truly additionally participated in a purchase order. Carlyle, which had about 26% fairness, is promoting about 6% of their fairness previous to this IPO. They will promote the remaining 20% within the provide on the market within the IPO. They will extinguish their complete stake in order that there will be no inventory overhang by way of promoting or and so on as we transfer ahead with respect to the Carlyle inventory.
Temasek, our different monetary investor, is eager to remain invested in us. They personal about 18-19% stake. So by way of assist, steering that we now have acquired for this pricing, we now have very sturdy inputs from a wide range of main people who find themselves acquainted with this house. In the pre-IPO sale,
Mutual Fund picked up a number of the 6% stake being offloaded. Novo, which is a Danish fund, selecting up a few of that stake and that was additionally finished on the value of Rs 336 shortly earlier than this IPO.
