Healthium Medtech IPO : 7 things to know
Healthium Medtech Ltd, a medical technology company focused on surgical care products, had filed its draft red herring prospectus (DRHP) in September 2021 and SEBI had already approved the IPO in late November 2021.
However, due to the sharp fall in some of the digital IPO listings and the fairly volatile market conditions, the IPOs reduced to a trickle. Healthium Medtech Ltd is yet to announce the dates of its IPO. The Healthium Medtech IPO will be a combination of a fresh issue and an offer for sale and the company is a dominant player in the Indian and international markets in the area of surgical care products.
7 important things to know about the Healthium Medtech Ltd IPO
1) Healthium Medtech Ltd has filed for an IPO with SEBI which comprises of a fresh issue of Rs.390 crore and an offer for sale or OFS of 391 lakh shares. However, since the price band for the stock has not been fixed, the size of the OFS and the value of the OFS is not known as of now and we need to wait for the price band to be announced, which would typically happen just ahead of the IPO.
Healthium Medtech Ltd is into the production of surgical care products that find applications in hospitals, clinics and in healthcare centres. The company has a vast market in India and in other parts of the world.
2) Out of the total IPO issue size, let us look at the OFS portion first. The OFS comprises of 391 lakh shares by early shareholders and promoters of the company. Among the key persons tendering shares as part of the offer for sale, the OFS is virtually dominated by one PE fund that is offloading.
Quinag Acquisition FDI Ltd will sell 390 lakh shares in the offer for sale while Mahadevan Narayanomani will tender the remaining 1 lakh shares in the OFS. The OFS will not be capital dilutive or EPS dilutive but will enable the early investors to partially monetize their stake and also improve the free float in the company.
3) The Rs.390 crore fresh issue portion will be used for predominantly for debt reduction and for infusion of funds into its subsidiaries. For example out of the total fresh funds raised of Rs.390 crore, the company has allocated Rs.50.09 crore for repayment or for prepayment of debt.
In addition, Rs.179.46 crore will be invested into its three subsidiaries viz. Sironix, Clinisupplies and Quality Needles. In addition, the company has also set aside an amount of Rs.58 crore for inorganic acquisitions and mergers in niche areas to complement their existing business model. Any additional funds beyond these outlays will be used either for funding working capital or for general corporate expenses.
4) Healthium Medtech is a global medical technology (MEDTECH) company that predominantly focuses on products used in surgical, post-surgical and chronic care. This is an area that is not exactly commoditized due to the exacting quality standards expected.
Healthium Medtech operates across 3 principal markets viz India, the United Kingdom and rest of the world. In terms of business verticals that Healthium Medtech caters to; there are 4 focus areas which comprise of advanced surgery, urology, arthroscopy and wound care.
5) The company has posted robust top line and bottom line numbers for the last two fiscal years. For FY21, Healthium Medtech reported net sales of Rs.727 crore, reflecting a YoY growth of 11.4%.
During the same FY21, Healthium Medtech reported net profits of Rs.85.43 crore, a growth of more than 2-fold compared to the previous year. This translates into net profit margins of 11.75% for the FY21 fiscal year, which is healthy by the general healthcare industry standards.
6) Healthium Medtech has also reported in its DRHP filing that it had gained market share across its target markets between fiscal year 2019 and the fiscal year 2021, while improving profitability over the period. This can also be attributed to rising medical consciousness post the pandemic.
The products of the company are reportedly deployed used in one out of every six surgeries across the world. The company works directly and closely with surgeons and hospitals to help deliver improved patient outcomes.
7) The IPO of Healthium Medtech Ltd will be lead managed by ICICI Securities, CLSA India, Credit Suisse Securities India and Nomura Financial Advisory. They will act as the book running lead managers or BRLMs to the issue.
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