After the IPO of Eris Lifesciences in June 2017, the multi speciality hospital, Shalby Ltd IPO follows in the Healthcare space.  Shalby Hospitals – it’s a chain of the largest joint replacement centers in the entire world.

The Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms. The country’s pharmaceutical industry is expected to expand at a CAGR of 12.89% over 2015-2020 to reach USD55 billion.

Let’s have do an in-depth analysis of the IPO:

Offer Details

Issue Size: Total Issue Size is Rs.5048 mn.

  • Fresh Issue of Rs. 4800 mn
  • OFS of 1,00,000 equity shares aggregating upto Rs.248 mn.

Opening Issue Date:  Dec 5, 2017

Closing Issue Date: Dec 8, 2017

Issue Price Range: Rs. 245 to Rs. 248

Lot Size: 60 equity shares

Face Value: Rs.10 per share

Merchant Bankers: Edelweiss Financial, IDFC Bank and IIFL.


Overview of the Indian Healthcare Sector

The population of India is expected to grow at a compound annual growth rate (CAGR) of nearly 1.0% between 2014 and 2020. Growing at this rate, India is expected to be home to 1.35 billion people by 2020. The per capita income of India has grown at a CAGR of 11% from 63000 in 2011 to 87000 in 2014. Gujarat had the highest per capita expenditure compared to its neighboring states.

The healthcare industry in India is growing at a fast pace and is expected to grow further with the government’s increased interest. Though, India’s total healthcare expenditure (as a percent of GDP) increased from 4.3% in 2000 to 4.7% in 2014, is currently lower than other South Asian countries like Singapore and China.


Overall market size

The Indian healthcare industry was estimated to be INR 9.2 trillion in 2016; grew at a CAGR of 14-15% over the last five years (2011 to 2015). The healthcare industry is expected to grow at a CAGR of 15-16% during 2015-20 and expected to reach INR 17.2 trillion in 2020.












In India, 70% hospitals belong to the Private sector among which 10% are private corporate hospitals and the remaining 30% are Government hospitals.













Key Growth Drivers of Sector

  • Deficient healthcare infrastructure and lack of healthcare workforce.
  • Increasing population and life expectancy.
  • Increasing urbanization and healthcare awareness.
  • Growing prevalence of lifestyle disease.
  • Rising income levels and affordability of healthcare.
  • Growth in health insurance coverage.
  • Emergence of medical tourism.

Company overview

Shalby Ltd. is one of the leading multi-specialty chain of hospitals in India. It is one of the tertiary care hospitals, few of which also offer Quaternary healthcare services to patients in various areas of specialisation such as orthopedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations.

Few Highlights
  • The hospital provides inpatient and outpatient healthcare services through eight fully operational hospitals
  • Aggregate operational bed count of fully operational hospitals was 781 beds, as on March 31, 2017.
  • Provide outpatient consultative healthcare services through three hospitals which were recently set up.
  • The hospital had a 15% market share of all joint replacement surgeries conducted by private corporate hospitals in India in 2016.
  • The hospitals also provides outpatient services through 68 Outpatient Clinics and have eight shared surgery centres within third party hospitals, which are called “Shalby Arthroplasty Centre of Excellence” (“SACE”), which offer orthopaedic healthcare services including surgeries.
  • Since March 2007, the hospital has conducted an aggregate of 84,579 surgeries, and provided healthcare services to an aggregate of 923,441 patients, consisting 121,576 inpatients and 801,865 outpatients.
  • The hospital has domestic and overseas outreach through a network of hospitals in India, and Outpatient Clinics and SACE located in India, Africa, and the Middle East.
  • The hospitals operate across five states, the Outpatient Clinics operate across 53 cities in 16 states in India, and SACE are present in five cities in four states in India.
  • The international footprint consists six Outpatient Clinics and one SACE in Africa, and two SACE in the UAE.


The hospital operates through a combination of the following models:

▪ Owning and operating multi-specialty hospitals;

▪ Operating and managing hospitals on a revenue sharing basis, by adopting an asset-light model;

▪ Associating with third-party hospitals on a revenue sharing and/or professional fee basis to offer orthopaedic healthcare services under SACE; and

▪ Providing orthopaedic healthcare services through Outpatient Clinics that are either independently operated by Shalby Ltd., or operated by Shalby Ltd. within third party premises on a revenue sharing basis.




The Company proposes to utilize the Net Proceeds from the Fresh Issue towards the following objects:

  1. Repayment or prepayment in full, or in part of certain loans availed by the Company (Rs. 3000 mn).
  2. Purchase of medical equipment for existing, recently set up and upcoming hospitals (Rs. 635.8 mn).
  3. Purchase of interiors, furniture, and allied infrastructure for upcoming hospitals (111.8 mn).
  4. General corporate purposes (1052.4 mn).



  • Leadership in orthopaedics and strong capabilities in other specialties

Having performed approximately 54,105 joint replacements since 2007, the Company has been a market leader in the area of joint replacement surgeries.





  • Integrated and scalable business model enhancing their patient reach





  • Experienced player with longstanding presence and brand recall

Although our Company was incorporated in the year 2004, healthcare services under the brand “Shalby” had commenced as early as the year 1994. The hospital established presence and strong brand recall in Gujarat, and an emerging presence in western and central India.


  • Ability to attract quality doctors, nurses, paramedical, and other staff

As at June 30, 2017, the hospital employed 2,049 employees and engaged 319 professional consultants, which comprised 294 doctors who are full-time consultants and 25 doctors who are part-time consultants. The staff strength also comprises 699 nurses and 1,350 paramedical, corporate and support staff and pharmacists. Since a majority of doctors are engaged full time, they are generally available on-call, round the clock, and are able to fulfil patient needs and requirements, while also effectively addressing emergencies

Hospitals currently being Operated by the Company:










Upcoming/Expansion Hospitals of the Company:



  • Strengthen hospital presence in western and central India, and continue expanding into new geographies.
  • Continue to enhance the outreach programmes.
  • Continue to strengthen healthcare services across other specialties
  • Implement initiatives to improve operational efficiencies
  • Continue to grow the ancillary businesses


  • A significant portion of the revenue (77 % for FY 17) is currently generated from two hospitals SG Shalby and Krishna Shalby. Further, a majority of the hospitals are located in the state of Gujarat. Any material impact on the revenue from these hospitals will impact their business, prospects, financial condition and results of operations significantly.
  • The company is dependent on one field of specialty for a substantial portion of revenue, i.e. orthopaedics. Any material impact on the earnings from orthopaedics will impact the financial condition and results of operations significantly.
  • Approximately 89% of the revenue is primarily dependent on inpatient treatments, which could decline due to a variety of factors.
  • Delay in receipt of payment from the patients / customers may affect the cash flows, which may, in turn affect the financial condition and results of operations.


Financial Analysis

  • Debt to Equity Ratio                                                                                                                                                                           (Rs. In Million)




*Post IPO


  • Total Income, EBIDTA and PAT                                                                                                                                     (Rs. In Million)








  • EBIDTA and PAT Margin (In %)








  • EPS




*Post IPO

  • Price to Earnings Ratio





*Post IPO

  • Price to Book Value




*Post IPO

  • Cash Flow Statement




Peer Comparison







*Post IPO








The Total Income and PAT have grown at a CAGR of 9.70% and 21.75% respectively for the last five Financial Years. The company’s debt to equity may remain around 0.42 after post IPO.

The margins are in an uptrend since FY13 and compared to the other companies in the hospital space, this company has higher margins. The company has highest RoNW among the other peers.

The company has negative cash flows in FY15 and Q1 of FY18 and it is mainly because of Investing Activities.



The company has maintained higher margins and RoE than its peers because of several cost-efficiency measures, such as procurement of medical consumables, lower capital expenditure per bed, higher beds to operation theatre, and better space utilisation.

The company is also in an expansion phase since the company has strategized to expand into new geographies. The integrated and scalable business model adds to the positive factors of the company.

Although, there is one important concern regarding the fixing of a ceiling on the maximum retail price of the knee implants (around one third of total revenue) by the The National Pharmaceuticals Pricing Authority.

Still we have a positive outlook towards a IPO and one can invest for long term in the issue.

Report By: Apeksha Shetty