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Asarfi Hospital

• Asarfi Hospital is coming out with a 100% book building; initial public offering (IPO) of 51,80,000 shares of Rs 10 each in a price band Rs 51-52 per equity share.
• The issue will open for subscription on July 17, 2023 and will close on July 19, 2023.
• The shares will be listed on BSE SME.
• The face value of the share is Rs 10 and is priced 5.10 times of its face value on the lower side and 5.20 times on the higher side.
• Book running lead manager to the issue is Hem Securities.
• Compliance Officer for the issue is Seepika Gupta.

Profile of the company

Asarfi Hospital is a 250 bedded multi-speciality hospital, which is serving people for over one and half decade by providing healthcare services in Dhanbad, Jharkhand. Accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL Accredited), it is an integrated healthcare service provider, committed to deliver valued healthcare services to its patients that includes prevention, treatment and proper rehabilitation. It is empanelled with several Government Agencies, Corporate Organizations for providing regular health care facilities to their employees and their dependants. It is also empaneled with the several Insurance and TPA providers.

Its hospital located at Dhanbad, Jharkhand is having departments/services like Cardiology, Neurosciences, General Medicine, Paediatrics & Neonatology, Obstetrics & Gynaecology, General Surgery, Gastroenterology, Orthopaedics Plastic Surgery & Cosmetics, Oncology, Nephrology, Urology, Ophthalmology, ENT, Day Care Services, Dental, Physiotherapy, Emergency, Nutrition & Dietetics, Anaesthesiology & Critical Care, Radiology, Pulmonology, Pain Management etc. among other healthcare services. 

The hospital has a full-fledged high dependency unit, Emergency Department, Outpatient consultation, CCU, ICU, NICU, SICU, Labor room, Endoscopy room, Neurosurgery and Cardiac unit. The Diagnostic Centre features laboratory and imaging equipment like the Open X-Ray, Ultrasound and CT scan. The Hospital offers both inpatient and outpatient care which covers a wide range of Medical and Surgical specialties.

Proceed is being used for:

• Part funding of capital expenditure for cancer hospital at Ranguni, Jharkhand.
• Acquiring land on leasehold basis for Health Management and Research Institute at Ranchi, Jharkhand.
• General Corporate Purpose.

Industry overview

Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well private players.  India’s healthcare delivery system is categorized into two major components - public and private. 

The government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides a majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I and tier-II cities. Healthcare has become one of India's largest sectors, both in terms of revenue and employment. The industry is growing at a tremendous pace owing to its strengthening coverage, service and increasing expenditure by public as well private players. The e-health market size is estimated to reach $10.6 billion by 2025.   

India’s healthcare sector is extremely diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business. The hospital industry in India is forecast to increase to Rs 8.6 trillion ($132.84 billion) by FY22 from Rs 4 trillion ($61.79 billion) in FY17 at a CAGR of 16-17%. India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of the population.

Pros and strengths

Well diversified and specialty service offerings: Its operations encompass various levels of healthcare services from primary to tertiary and position it to be a one-stop destination for patients’ needs. In addition to providing core medical, surgical and emergency services, it also offers advanced surgical treatments in various specialties, including cardiology, oncology, radiology, neurosciences, paediatrics, gastroenterology, orthopaedics and critical care services. It is investing significantly in the technology, equipment and infrastructure required to perform the most advanced procedures and to strengthen its specialty focus. 

Quality healthcare services: Since it incorporated in the year 2005 and commenced operations in the year 2008, it has been focused on providing quality healthcare service. It constantly strive for a high standard of clinical excellence at its hospital. It follow well-defined quality and patient safety protocols in patient handling and care. Further, its hospital offers a wide range of advanced medical care and emergency services, including cardiology, oncology, neurosciences, paediatrics, gastroenterology, orthopaedics, critical care services and allied services such as radiology. Its focus on quality is evidenced by the quality certifications and accreditations that its facility has obtained from various agencies. Its multi-specialty hospital had received accreditation by the NABL. Its NABH accreditation has been expired on March 02, 2023, and has now been re-applied by it.  

Track record of stable operating and financial performance and growth: It has demonstrated stable operating and financial performance and growth over the past three fiscals. Its growth in revenue and profitability can be credited to its strong operational efficiency, which it achieve by streamlining its clinical and administrative functions, continually introducing process innovations and ensuring that it maintain economies of scale.

Risks and concerns

Face intense competition: It competes with hospitals, clinics, diagnostic chains and dispensaries of varying sizes with different specialties. It competes on the basis of factors such as its specialty and other service offerings, quality and selection of healthcare professionals, affordability, quality of care, technology, quality of facilities, patient satisfaction, brand and reputation. Its pharmacy in its hospital competes on factors such as price and product offerings. Some of its multi-specialty competitors offer services that it do not offers. Some of its competitors are owned or operated by governmental bodies or by private not-for-profit entities supported by endowments and charitable contributions, which can finance capital expenditures without incurring significant tax obligations. It may also face competition from new market entrants, such as established foreign healthcare companies which may enter the Indian market in the future. It is required to evaluate and increase its competitive position in each of its markets for example by offering competitive compensation to healthcare professionals and quality services with competitive rates to its patients. As a result, it may experience lower profitability as it strives to compete with its competitors on all fronts.

Revenues dependent on single hospital in Dhanbad (Jharkhand): It derived almost all of its revenue from operations from its Dhanbad hospital. For instance, in Fiscal 2023, its total revenue were Rs 7303.26 lakh of which 99.54% were derived solely from the operations of Dhanbad hospital. Any material impact on its revenues from its hospital in Dhanbad, including by reason of a reduction in patient footfall, regulatory changes, reputational harm, liabilities on account of medical negligence, adverse publicity or natural calamities and increased competition, could have a material adverse effect on its business, financial condition and results of operations. Due to the geographical concentration of its hospital primarily in Dhanbad, it is exposed to adverse economic or political circumstances that affect demand for healthcare services in the region. Any regional slowdown, political unrest, disruption, disturbance or sustained downturn in the economy of such regions could adversely affect its business, financial condition and results of operations.

Rely on third party suppliers: It sources its equipment and supplies from third party suppliers under various arrangements. Any failure to procure equipment, reagents or drugs on a timely basis, or at all, from such third parties and on commercially suitable terms could affect its ability to provide its services. Certain of its medical and laboratory equipment are also procured under lease agreements. Under some of these agreements, the supplier generally has the discretion to terminate the agreement with a specified period of notice in the event of a breach of any term or condition of the agreement, including but not limited to default in payment of the applicable fee. Any such termination and consequent removal of the installed equipment may adversely affect its operations. 

Outlook

Asarfi Hospital is a 250 bedded multi-speciality hospital, which is serving people for over one and half decade by providing healthcare services in Dhanbad, Jharkhand. Accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL Accredited), it is an integrated healthcare service provider, committed to deliver valued healthcare services to its patients that includes prevention, treatment and proper rehabilitation. On the concern side, it sources its equipment and supplies from third party suppliers under various arrangements. Any failure to procure equipment, reagents or drugs on a timely basis, or at all, from such third parties and on commercially suitable terms could affect its ability to provide its services.

The issue has been offered in a price band of Rs 51-52 per equity share. The aggregate size of the offer is Rs 26.42 crore to Rs 26.94 crore based on lower and upper price band respectively. On performance front, the company’s total income for the financial year 2022-23 stood at Rs 7,303.26 lakh whereas in Financial Year 2021-22 the same stood at Rs 6,619.54 lakh representing an increase of 10.33% primarily due to an increase in revenue from operations. The restated profit after tax for financial year 2022-23 was Rs 801.53 lakh in comparison to Rs 572.84 lakh in the financial year 2021-22, representing an increase of 39.92%. Going forward, it aims to adopt the latest medical technologies and equipment to provide better treatment for its patients and by incorporating such technologies in its operations, it will be able to improve patient care, expand the scope of treatments that it offers and increases affordability, efficiency and cost savings. It also plans to further implement advanced technology to improve its hospitals’ offering.