Manipal Health

Manipal Health

By Geetanjali Kedia
about 13 days ago

IPO Size: Rs. 9,275 cr

  • Fresh Issue of Rs. 8,000 cr for (i) repaying Rs. 5,553 cr debt of 9% NCDs taken to fund 90% stake buy in Sahyadri Hospitals (ii) acquiring balance 9.8% in Sahyadri Hospitals for Rs. 574 cr
  • Offer for Sale (OFS) of Rs. 1,275 cr, 50% of OFS,by THE promoter Temasek (50% stake to drop to 44%), 31% by promoter Dr. Ranjan Pai’s Manipal Global (32% to shrink to 28%) and balance 19% of OFS comprises by the 5 investors (18% combined stake to drop to 16% post IPO)

Price band: Rs. 560-590 per share

M cap: Rs. 77,606 cr, implying 12% dilution

  • 75% for institutions and only 10% retail, as company’s net tangible assets is negative, as at 31.3.26

IPO Date: Wed 29th Jul to Fri 31st Jul 2026, Listing Wed 5th Aug 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

India’s 2nd Largest Private Hospital Chain

Manipal Health promoted by financial investor Temasek and Manipal Group’s Dr. Ranjan Pai runs 49 hospitals aggregating 13,037 licensed beds, of which 9,252 are owned beds and 3,785 under operation & maintenance (O&M) mainly in non-metro cities. Company is a leading player in headquarters Bengaluru and the metros of Kolkata and Pune (grown inorganically), which account for ~40% of its bed capacity. In terms of Rs. 10,900 cr revenue, Manipal is 2nd largest private hospital after Apollo Hospitals.

 

Lowest Occupancy and ARPOB among Large Peers

Of the total 13,037 licensed bed capacity, less than 70% or 6,878 were operational in FY26, with only 64% occupancy, lower than 67% to 76% of listed peers Apollo, Max and Fortis Health. Manipal’s occupancy has also been on a decline, averaging 65%, which exerts pressure on profitability, as fixed costs are not fully absorbed.

Another important matrix, Average Revenue per Occupied Bed (ARPOB) is at Rs. 66,144, again below Fortis’ Rs.68,800 and Max’s Rs. 77,800.

 

Leveraged Acquisition

In Q3FY26, company acquired 90% stake in Pune-based 1,606-bedded Shayadri Hospitals, funded via Rs. 5,310 cr NCDs carrying 9% coupon. This is part of company’s gross debt of Rs. 11,185 cr, as of 31.5.26, sought to be halved via IPO proceeds.

However, this acquisition is margin-dilutive - in FY25, Sahyadri clocked 18.6% EBITDA margin, excluding other income and 7% net margin on Rs. 1,022 cr topline. As against, Manipal’s margins are 26% and 13% respectively. Thus, Manipal’s FY26 proforma EBITDA and PAT margins contracted to 25% and 6% respectively, on proforma topline of 10,936 cr. Proforma FY27 EPS stood at Rs. 5.6, against reported FY26 EPS of Rs. 7.67.

 

Large Brand Licensing Outgo

In Mar 2026, company issued 2.38 cr shares or 1.8% post-IPO equity (worth Rs. 1,400 cr at IPO price) to Manipal promoter group for perpetual license of brand Manipal. This upfront transaction appears quite high just before the IPO.

 

Unattractive Pricing

M cap of Rs. 77,606 cr and Enterprise value of Rs. 99,892 cr implies an EV/EBITDA multiple of 25x on FY27E basis, PE multiple of ~60x and EV/operating bed of Rs. 11.6 cr. While this may be comparable to larger listed peers, they remain unattractive for 25% EBITDA margin, low occupany and 12-13% RoE, on an absolute basis.  

The biggest negative for the stock is company’s shareholding structure. Financial promoter Temasek first invested in the company in Oct 2017. After the 18 month mandatory lock-in period, it would have held on to Manipal investment for over 10 years. Definitely an exit will be sought! A massive 44% post-IPO stake implies a large supply, exerting huge downward pressure on stock price, and also for a long period of time. Of late, even good companies reporting healthy growth like Vishal Mega Mart, Billionbrains among others, have witnessed huge selling overhang from financial promoters and investors respectively. Post-listing, Manipal will be no exception.