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KIMS shares list 22% above IPO price: Krishna Institute of Medical Sciences makes stellar market debut

KIMS had a market capitalization of Rs 8,074 crore on listing.
(Image: REUTERS)

Krishna Institute of Medical Sciences (KIMS) shares made a strong listing on the stock exchanges today amid muted market sentiment. Shares of Krishna Institute of Medical Sciences opened for trading at Rs 1,008 per share, up 22% or Rs 183.9 apiece from the IPO price of Rs 825 per share. KIMS, a leading healthcare group operates in the Southern states of Andhra Pradesh and Telangana. The company had entered the IPO market to raise Rs 2,143 crore through an offer for sale and a fresh issue. On listing the stock had a market capitalisation of Rs 8,074 crore.

KIMS IPO saw investors bid for 2.59 crore equity shares of which 24.24 lakh equity shares were part of a fresh issue while the remaining 2.35 crore shares or 91.6% of the total issue were sold by existing shareholders as an offer for sale (OFS). Post issue promoter shareholding will drop to 38.84% while public shareholding will increase to 61.16%. 

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75% of the issue was reserved for Qualified Institutional Buyers (QIB), who bid for 5.26 times the reserved portion. Non-Institutional Investors (NII) had 15% of the issue reserved and subscribed to 1.89 times the quota. Retail investors were eligible for 10% of the issue size and the bid 2.9 times for the portion. Employees of the healthcare company fully subscribed to their portion of the issue. With this, the total subscription for KIMS IPO was at 3.86 times.

KIMS operates nine multi-speciality hospitals with a bed capacity of 3,064, including over 2,500 operational beds. It offers a comprehensive range of healthcare services across 25 specialities and super specialities. “KIMS owns one of the largest hospital chains in Andhra Pradesh and Telangana. It reported Rs 1,340.1 crore of revenues and Rs 381 crore of adjusted EBITDA in FY21, the highest in Andhra Pradesh and Telangana,” ICICI Direct said in an IPO note. They added that KIMS has demonstrated one of the best financial performances among peers. ICICI Direct had a ‘Subscribe’ rating on the issue for listing gains, expecting financials to be depressed going forward.

From the proceeds of the fresh issue, the firm plans to repay Rs 150 crore of its total debt outstanding and the remaining funds are to be used partly for Capex and general corporate purpose. “Given the strong internal accruals, we expect KIMS to be net debt free in FY22. Going forth, KIMS may raise debt for funding its capex,” analysts at Ventura securities say. “We value the stock at Rs 1,275 (17x FY24 EV/EBITDA). This represents a potential upside of 55% from the IPO price of Rs 825 per share (upper band) over the next 24 months,” they added.

Among the concerns faced by KIMS is an additional wave of Covid-19. The current pandemic has resulted in a fall in inpatient volumes. Further, the dependence of KIMS on hospitals in Hyderabad is also seen as a concern. KIMS joins peers such as Apollo Hospitals, Fortis Healthcare, Aster DM healthcare, among others on the bourses.

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