Risk Analysis of Shanmuga Hospital IPO 

The Shanmuga Hospital IPO will be open for subscription from February 13, 2025, to February 17, 2025. The allotment is expected to be finalized on February 18, 202,5 and the listing will take place on February 20, 202,5 on the BSE SME. 

The IPO price is ₹54 per share. The minimum lot size for retail investors is 2000 shares, requiring a minimum investment of ₹1,08,000. For high net worth individuals (HNI), the minimum lot size is 4000 shares (2 lots), with a minimum investment of ₹2,16,000.

This blog offers a comprehensive review of the Shanmuga Hospital IPO, detailing its structure, company overview, risk factors, market landscape, competitive strengths, and financial performance, all in a simplified and analytical manner.

IPO Details

Face Value:₹10 per share

Price: ₹54 per share

Total Issue Size:38,18,000 shares

(aggregating up to ₹20.62 Cr)

Issue Type: Fixed Price Issue IPO

Listing Platform: BSE SME

Market Maker: Black Fox Financial Private Limited

Lead Manager: Finshore Management Services Limited

Registrar: Integrated Registry Management Services Private Limited

Promoters: Dr. Panneerselvam Palaniappan Shanmugam, Dr. Prabu Sankar Panneerselvam, Dr. Priyadharshni Dhandapani, and Mrs. Jayalakshmi Panneerselvam

Share Allocation Breakdown:

• QIB (Qualified Institutional Buyers): Up to 50% of the net issue

• Retail Investors: Up to 35% of the net issue

• Non-Institutional Investors (HNI): Up to 15% of the net issue
  
  

Share Holding Pre Issue: 100.00%

Share Holding Post Issue: 71.95%

IPO Timeline

Opening Date: Feb 13, 2025

Closing Date: Feb 17, 2025

Basis of Allotment: Feb 18, 2025

Refund Initiation: Feb 19, 2025

Credit of Shares to Demat: Feb 19, 2025

Listing Date: Feb 20, 2025

Company Overview

Shanmuga Hospital Limited is a well-established multispecialty hospital based in Salem, catering to a wide range of medical needs. With a 151-bed capacity, the hospital is equipped with state-of-the-art healthcare technology and is committed to delivering high-quality patient care.

SHL is both NABH (National Accreditation Board for Hospitals) and NABL (National Accreditation Board for Testing and Calibration Laboratories) accredited. This dual accreditation underlines the hospital’s commitment to maintaining international standards in both healthcare delivery and diagnostic services.

The hospital boasts an extensive range of facilities, including:

• Clinical Departments:

• Oncology Unit

• High Dependency Unit (HDU)

• Emergency Department (ED)

• Cardiac Care Unit (CCU)

• Intensive Care Unit (ICU)

• Neonatal Intensive Care Unit (NICU)

• Labour Room

• Endoscopy Room

• Neurosurgery Unit

• Cardiac Unit

• Diagnostic Center: Equipped with advanced imaging and laboratory services such as X-rays, Ultrasound, CT scans, and MRIs, along with modular operation theatres.

Objects of the Issue

Risk Factors

Here are some key considerations:

• Limited Operating History: Originally incorporated as a private limited company in 2020, SHL converted to a public limited company after acquiring the business of a partnership firm in December 2023. This relatively short operating history may make it challenging for investors to gauge the hospital’s long-term performance based on historical data.

• Dependence on Healthcare Professionals:The hospital relies heavily on the expertise and availability of healthcare professionals, many of whom are engaged on a consultancy basis. In a competitive market where qualified doctors and nurses are in short supply, retaining top talent is crucial for maintaining service quality and operational efficiency.

• Equipment Procurement and Bed Occupancy: SHL has yet to place orders for critical medical equipment. Any delays or cost escalations in procuring such equipment could affect the hospital’s ability to commence operations efficiently. Moreover, the hospital’s financial performance is closely tied to maintaining high bed occupancy rates. Falling short in this area could adversely impact revenue and profitability.

• Supplier Dependence:A significant portion of the hospital’s medicine purchases is dependent on a few key suppliers. The loss of any major supplier could disrupt operations and affect the hospital’s cost structure, posing another risk to its business model.

• Competitive Market Dynamics:The healthcare sector is fiercely competitive. SHL competes with numerous hospitals, clinics, and diagnostic chains based on factors such as service quality, technology, pricing, and patient satisfaction. Any inability to keep pace with competitors could hinder the hospital’s growth prospects.

Market Landscape and Growth Drivers

The healthcare sector in India is poised for significant expansion. Here are some of the key factors driving growth:

Expanding Infrastructure Needs: India’s healthcare infrastructure is in a phase of rapid development. With plans to add millions of new hospital beds and improve doctor-to-patient ratios by 2030, the demand for high-quality healthcare facilities is on the rise.

Research and Innovation:Government initiatives and research reports, such as the Longitudinal Ageing Study of India (LASI), are paving the way for enhanced elderly care and preventive services. This focus on research is set to further boost the overall healthcare ecosystem.

Surge in Health-Tech Investments: India has become a hotspot for health-tech investments, attracting billions of dollars in venture capital. Technological advancements in medical devices, diagnostic tools, and patient care platforms are reshaping the industry landscape.

Rising Demand for Health Insurance:Post-COVID, there has been a substantial increase in the demand for health insurance. As patients become more insurance-savvy, the ability of hospitals to offer cashless treatment facilities through tie-ups with insurance providers becomes a significant competitive advantage.

Advancements in Surgical Technology: The advent of sophisticated surgical robots, high-resolution visualization tools, and precise imaging systems like MRI and CT scans are enhancing the quality and safety of surgical procedures. These technological advancements play a crucial role in improving patient outcomes and attracting a tech-savvy patient base.

Competitor Comparison: According to the offer document, SHL’s primary peers include Asarfi Hospital, Family Care Hospitals, and Aashka Hospitals. These competitors operate within the same regional and service segments, making it essential for SHL to leverage its unique strengths.

Competitive Strengths

1. Robust Oncology Services: SHL has carved out a niche in oncology care, featuring a dedicated team of oncologists and advanced treatment technologies. This focus on cancer treatment has helped build a reputation for excellence, drawing patients from across the region.

2. Experienced Leadership: With over four decades of combined experience among its promoters, SHL benefits from deep-rooted expertise in the healthcare sector. This legacy of clinical excellence and patient-centric care is a significant asset for the hospital.

3. Affordability: One of SHL’s core strengths is its commitment to providing quality healthcare at affordable prices. By streamlining operations and maintaining transparent pricing, the hospital ensures that patients from various socioeconomic backgrounds can access its services.

4. Advanced Medical Equipment: Investments in specialized equipment such as Linear Accelerators (LINAC) for radiation therapy, Catheterization Laboratories (CATHLAB) for interventional cardiology, high-resolution MRI machines, and modular operation theatres place SHL at the forefront of medical innovation.

5. Strategic Tie-ups: Collaborations with both government agencies and private insurance companies allow SHL to offer cashless treatment and broaden its patient base. These partnerships enhance the hospital’s accessibility and appeal, further strengthening its market position.
   
   

Financial Performance and Key Metrics

These metrics indicate a declining trend in both PAT and RoCE margins over time. While the high margins in FY22 may reflect initial strong performance, the subsequent dip highlights operational challenges and increased competition. Investors should consider these figures in the context of the hospital’s strategic plans and market environment.

Conclusion

Shanmuga Hospital Limited is set to become a significant player in the regional healthcare sector with its upcoming IPO on the BSE SME platform. Operating a 151-bed multi-specialty hospital in Salem, SHL combines modern infrastructure with a diverse range of services, from oncology to advanced diagnostics. Its competitive strengths lie in its specialized services, experienced leadership, affordability, and strategic partnerships, all of which position the hospital well against its peers.

However, prospective investors should note the inherent risks, including the limited operating history, dependence on external healthcare professionals, potential delays in equipment procurement, and a highly competitive market environment.

Investors considering participation in the IPO should review the company’s financials and Shanmuga Hospital PO RHP thoroughly to make an informed decision. For more insights and detailed analysis,Whatsapp group, andvisit  www.stockknocks.com.

DISCLAIMER

The information provided in this blog is for informational purposes only and should not be construed as investment advice. Readers are encouraged to conduct their own research and consult with financial advisors before making any investment.