If there’s anything people are giving more importance after the Covid-19 pandemic, it’s their health! And due to increased focus towards health, people have lately started to understand the importance of buying life and health insurance policies for themselves and their loved ones. And to capitalize on this opportunity, a company by the name Medi Assist Healthcare Services Limited has filed its draft IPO prospectus with the SEBI to come up with its IPO. So let us discuss the company’s business fundamentals in detail.
About Medi Assist Healthcare Services Limited
Medi Assist Healthcare Services Limited is a technology-led company that plays a crucial role in the health insurance ecosystem. The company is India’s largest health benefits administrator in terms of revenues and premium serviced for health insurance policies. The primary clients of the company are insurance firms. The company managed ₹7829.5 crore of health insurance premium for FY20, and had a market share of 17% in private health insurance market.
The company has developed a pan-India healthcare provider network which comprises over 11,000 hospitals across 722 cities and towns as of FY20. The company settled 3.77 million claims worth ₹78,993 million for FY20.
Medi Assist Healthcare Services Limited IPO Details
Following are the details of the company’s IPO:
- The company has not yet come up with the IPO subscription dates.
- The company has not yet come up with the IPO price range.
- The IPO is an entire offer for sale and the company will not receive any proceeds from the issue.
- The company will list its shares on the NSE and the BSE.
Objectives of the IPO
Following are the objectives of the company’s IPO:
- The IPO is an entire offer for sale and the company will not receive any proceeds from it.
- The company has proposed an offer for sale of up to 2.8 crore equity shares.
- Further, by listing its equity shares on the exchanges through the IPO, the company expects to enhance its corporate image and provide a liquid market for trading in the company’s shares.
Following are the key strengths of the company:
- According to a report, India’s health insurance gross domestic premium income has grown at a CAGR of 20% over the past five years, and the company is well-positioned to capture the favorable industry dynamics.
- The company is India’s largest health benefit administrator in terms of revenues and premium serviced for health insurance policies for the years FY18, FY19, and FY20.
- The company has a scalable technology-enabled infrastructure addressing the needs of all constituents of health insurance ecosystem.
- The company’s technology platforms have enabled it to steadily increase the volume of transactions without correspondingly increasing employee base, leading to cost leadership.
- For nine months ending December 2020, 76% of cashless claims submitted by hospitals were made online, as compared to 65% in FY18.
Following are the key risks in the company’s business:
- The company’s business is dependent on the continued demand for benefits administration services by insurance companies, corporates, and state and central governments.
- Any adverse change in the company’s relationship or arrangements with insurance companies could adversely affect its business.
- For FY20, the company derived 65% of its total revenues from its top five customers, thus posing concentration risk.
- The company’s business is dependent on corporate accounts in certain industries, and any adverse events in these industries could disrupt the company’s business.
- The company’s services are regulated by the IRDAI, and its inability to comply with them may adversely affect business operations.
Fundamentals of the company
Following are the fundamentals of the company:
- The company’s revenue from operations stood at ₹241.5 crores in FY18 and increased to ₹330.4 crores in FY20. For the nine months ended December 2020, the company’s revenue from operations stood at ₹257 crores.
- The company’s profit after tax stood at ₹43.8 crores in FY18 and decreased to ₹39.1 crores in FY20. For the nine months ended December 2020, the company’s profit after tax stood at ₹33 crores.
- The company’s total borrowings increased from₹52.4 crores in FY18 to ₹71.9 crores in FY20.
- The company’s net asset value per share stood at ₹37.03 for the nine months ending December 2020.
- The company’s earnings per share stood at ₹4.95 for the nine months ending December 2020.
According to the company prospectus, there are no other listed companies in India which are engaged in a similar line of business as the company. So a peer comparison would not be possible in this regards.
Discussed above were the details of Medi Assist Healthcare Services Limited IPO. The company is not yet out with the IPO dates and IPO price, through which investors can assess the company’s valuations. Investors should perform their own due diligence with regards to company fundamentals and risks and then take a decision to invest in the company’s IPO or not.