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BACKGROUND

Incorporated in 2002, Jupiter Lifeline Hospital Limited (JLHL) is a key multi-specialty tertiary and quaternary healthcare providers in the Mumbai Metropolitan Area (MMR) and western region of India. As on March 2023, it has a total capacity of 1,194 hospital beds across three hospitals which operates under the ‘Jupiter’ brand in Thane, Pune and Indore with 1,306 doctors. Also, the hospitals are equipped with over 30 key specialties in order to simplify the process of delivery of healthcare.

Objects and Details of the Issue:

* Total issue of ~Rs. 869 Cr (at upper price band) consists of fresh issue worth Rs. 542 Cr and offer for sale worth Rs. 327 Cr

* To utilise an estimated amount of Rs. 510 Cr from the net proceeds to repay, in full or part, of borrowings availed from banks by JLHL and its Material Subsidiary

Investment Rationale:

* Strong business model having multi-specialty tertiary and quaternary healthcare with an established brand

* ‘All-hub-no-spoke’ model with focus on quality patient care supported by modern infrastructure and technological capabilities

* Ability to retain Skilled and experienced healthcare professionals

* Strategic expansion in western markets

* Continue to improve quality of care and invest in latest technologies

* Financial performance with a diversified revenue mix

Valuation and Recommendation:-

JLHL has mainly focused on to cater middle and upper middle class households where it observes working class segment with organized sector that supports high possession of medical insurance. JLHL’s has delivered healthy financials with 24.5% revenue growth and 34.6% EBITDA growth between FY20-23. Overall EBITDA margin has also improved from 17.8% in FY20 to 22.6% in FY23. ROE and ROCE stood at healthy levels of 20.1% and 20.5% in FY23 which are largely in line with average performance of listed peers. The issue is valued at reasonable valuation of 22.4x FY23 EV/EBITDA compared to 30.4x FY23 average EV/EBITDA of listed peers. Thus, we recommend ‘SUBSCRIBE’ to the issue

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