Healthium Medtech Ltd IPO

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IPO Synopsis

IPO Synopsis
Healthium Medtech Ltd, the country's second largest medical consumables and surgical sutures company, has filed draft papers with SEBI to raise funds via initial public offering (IPO) worth Rs. 390 crore and an offer for sale of up to 39.10 million shares by existing shareholders and promoters.
The OFS will comprise of sale of 39 million shares by Quinag Acquisition (FDI) and up to 100,000 shares by Mahadevan Narayanamoni. Currently, Quinag Acquisition FDI holds 99.79% stake in the firm.
ICICI Securities, CLSA India, Credit Suisse Securities India and Nomura Financial Advisory and Securities India are the lead managers to the issue.

Objective of the Issue
Objects of the issue are
•    Rs. 50.09 crore will be used to repay debt 
•    Rs179.46 crore will be invested into its arm Sironix, Clinisupplies and Quality Needles 
•    Rs58 crore will be used for acquisition and other strategic initiatives
 

About Healthium Medtech Ltd

Healthium Medtech focusses on products used in surgical, post-surgical and chronic care. It operates across India, the UK and rest of the world and four focus areas, namely, advanced surgery, urology, arthroscopy and wound care.
Further, in 2021, the company is: 
• the largest independent medical device company and second-largest company overall, in the surgical consumables market in India with a 7.91% share based on value 
• the largest non-captive surgical needles manufacturer, with a 22.30% share in overall volume sales globally, and 45.41% share of the non-captive market
• one of the largest independent medical device companies and the third-largest company overall in the urology collection devices market in the UK, with a 13.96% market share.

The market for surgical consumables and arthroscopy products in India is estimated to be US $455.84 million in 2021 and estimated to grow at a CAGR of 9.60% between 2021 and 2025, driven by surgical volumes growing at 9.83% 
The quality and value proposition the company offers aligns it with the focus of healthcare stakeholders such as governments, hospitals, payers and surgeons on improving affordability of, and access to, quality healthcare. Further, its well-established corporate and product brands, and relationships with hospitals, surgeons and distributors create competitive advantages for its business.
It has 21 patents in India and 11 patents in the US, and a further 22 and six patent applications pending approval in India and US, respectively. It has eight manufacturing facilities of which seven are located in India and one is located in China.
 

Financials

Particulars (in Rs. Crores)

FY21

FY20

FY19

Revenue

713.36

639.18

584.02

EBITDA

153.93

95.57

54.43

PAT

89.20

60.01

56.82

EPS (basic in Rs.)

18.47

7.95

2.97

ROE

3.57%

10.98%

21.57%

ROCE

6.45%

16.08%

22.98%

 

Particulars (in Rs. Crores)

FY21

FY20

FY19

Total Assets

791.78

710.31

683.34

Share Capital

9.26

9.25

9.25

Total Borrowings

97.96

89.90

64.85

 

Particulars (in Rs. Crores)

FY21

FY20

FY19

Net cash generated from / (used in) operating activities

122.13

58.92

51.44

Net cash from / (used in) investing activities

-2.21

-17.41

-9.10

Net cash flow from / (used in) financing activities

-44.72

-67.20

-20.01

Net increase (decrease) in cash and cash equivalents

75.20

-25.69

22.33


The Key points are- 

Key Points

  • Strengths

    1. A leading medtech company with global reach, and are well-positioned to benefit from favorable industry dynamics in high growth markets
    2. An innovative and comprehensive product suite driven by its focused research and development efforts, and have a proven track record of commercializing the products
    3. An extensive sales network and market access across its focus areas with long-standing relationships with customers
    4. High precision, integrated and scaled manufacturing facilities with global certifications
    5. A proven track record of driving inorganic growth and successfully integrating acquired businesses
    6. A proven track record of robust financial performance
       
  • Risks

    1. It is subject to complex laws and governmental regulations governing the products and business operations, compliance with these laws and regulations requires significant time and cost
    2. Failure to maintain or renew necessary licenses, permits, product registrations, licenses or approvals, or to comply with required standards, could have an adverse effect on the business,
    3. Changes in law or interpretations of existing, or the promulgation of new laws, rules and regulations applicable to the company and its business
    4. Quality problems and product liability claims could lead to recalls or safety alerts, reputational harm, adverse verdicts or costly settlements
    5. Development of new products and enhancement of existing products, which requires significant research and development, clinical trials and regulatory approvals, all of which may be very expensive and time-consuming and may not result in commercially viable products
       

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