IPO-Bound Jupiter Hospitals To Add New Facilities In Next Few Years, Says CEO
The company aims to go up to 2,500 beds in the next three to five years, Dr Ankit Thakker said.
Jupiter Life Line Hospitals Ltd. plans to raise Rs 615 crore through a fresh issue, along with an offer for sale of around 44.5 lakh shares.
The multi-specialty hospital chain filed its draft red herring prospectus in May. The Mumbai-based company plans to use the proceeds from the fresh issue towards the retirement of debt worth Rs 464 crore and the balance funds of around Rs 151 crore for general corporate purposes, the draft prospectus said.
"We plan to add three to four new hospitals in the next three to five years," Dr Ankit Thakker, chief executive officer of Jupiter Life Line Hospitals, told BQ Prime.
The company predominantly operates in the western region of India, with hospitals in Thane, Pune, and a recently acquired hospital in Indore. It is also setting up a new hospital with 500 beds in Dombivli, near Mumbai.
"The current thought is to cement our position in western India and become leading healthcare providers in the west," Thakker said.
For the growth plan of the next phase, he said that they are exploring opportunities in the west, and the aim is to go up to 2,500 beds in the next three to five years. The company has a current bed capacity of 1,194 beds as of December 2022, the prospectus said.
They will be adding 200 more beds at the Indore facility, and the remaining expansion will be through the addition of three to four newer hospitals, primarily through greenfield projects, Thakker said. They will also look at acquisition opportunities.
Jupiter earned after-tax margins of 8.7% in the nine months ended December 2022 and 6.94% in fiscal 2022, according to the prospectus. This falls in the lower range of the listed peer set's PAT margins. However, its Ebidta margins, at 23.84% and 21.35% in 9MFY23 and FY22 respectively, are on the higher side of the peer set range.
The current debt of around Rs 460 crore, which attracts an interest component, and the Indore facility, which is not mature yet, are weighing down on the PAT margins, Thakker said. "Once we are debt-free, the numbers should start looking better."
The company also has cash reserves of around Rs 120 crore for the group's future expansion plans, he said.
While the addition of newer hospitals usually puts pressure on margins because they take a year or two to stabilise, their Pune facility is still in the growth phase, and Indore has started maturing and is expected to generate more cash, the CEO said.
Thus, on a consolidated level, there will not be a drag on their profit and loss statement, and they will be able to deliver growth as planned, according to Thakker.
The company has a favourable payor mix of around 46% in cash and 52% from insurance, with a very small balance component from government schemes in 9MFY23. Its average revenue per occupied bed was Rs 51,126 for the first nine months of FY23, and the average length of stay stood at 3.98 days.
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