CARE has come out with a research report on Lotus Eye Care Hospital. It has assigned IPO Grade 3/5 to the company's IPO. The company proposes an initial public offering of about one crore equity share of face value of Rs 10 each. The issue will close today.
CARE report on Lotus Eye Care Hospital's IPO:
CARE has assigned a ‘CARE IPO Grade 3’ to the proposed IPO (initial public offer) of Lotus Eye Care Hospital (LECHL). ‘CARE IPO Grade 3’ indicates Average Fundamentals. CARE assigns IPO grades on a scale of Grade 5 to Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. CARE’s IPO grading is an opinion on the relative fundamentals of the issuer. LECHL proposes an initial public offering of about one crore equity share of face value of Rs.10 each.
The grading factors in the vast experience of the promoter in the field of eye surgery, supported by qualified and experienced team of doctors, availability of latest sophisticated technology and medical equipment providing comprehensive eye care services and high profit margins of the company. The grading is however constrained by company’s small size of operation, regional presence, project implementation risk, uncertainty associated with the proposed revenue streams in light of competition from established players and moderate corporate governance practices which presents scope for improvement LECHL is a leading super-specialty eye care company, originally incorporated as “Kalaivani Health Centre Pvt Limited” in March, 1997. The name of the company was subsequently changed to “Lotus Eye Care Hospital Limited” upon conversion into Public Limited Company in October, 2007. The company was promoted by Dr.S.K.Sundaramoorthy and his family members Dr.Sundaramoorthy is a renowned eye surgeon and has more than 25 years of experience in the field of eye surgery. He is the Chairman and Managing Director (CMD) of LECHL and looks after the day to day affairs of the company.
LECHL runs a leading super-specialty eye care hospital and is headquartered in Coimbatore. LECHL offers advanced treatment for cataract, diabetic related eye diseases and refractive errors besides regular eye care services. LECHL has a team of qualified and experienced doctors in different specialties using the latest technology medical equipments and backed by well-trained paramedical and administrative team. Currently, LECHL has four eye care centers in Coimbatore, Salem and Tirupur and the total bed strength of all the centers is 120.
LECHL has structured its business activities in the form of a “hub and spokes” network under which its centers are organized into primary, secondary and tertiary eye care centers. The tertiary eye care centre functions as a hub, which is surrounded by secondary eye care centers, which are in turn served by the outermost layer of primary eye care units. This model results in increased reach and quality of service to patients and enhanced market visibility.
Gross sales of LECHL increased from Rs.221 lakh in FY05 to Rs.695 lakh in FY07 due to the acquisition of the optical business of Dr. Sundaramoorthy and merger of Dr.S.K.S. Eye Care Centre Pvt Ltd, a company promoted by Dr. Sundaramoorthy, with LECHL. Substantial portion of LECHL’s revenue is from cataract department, which accounts for around 30- 35% of the total revenue. For FY07, PBIDT and PAT margin was high as 41% and 18% respectively. ROCE and RONW were moderate at 12.8% and 14% respectively in FY07.
LECHL has planned various expansion projects which include establishing new secondary and primary centers with latest technology and expanding their existing facilities. The total estimated project cost is Rs.55 cr which will be funded by IPO issue proceeds of Rs 42 crore and debt of Rs 10 crore from various banks and balance (Rs.3cr) by internal accruals.
With the emergence of India as a destination for medical tourism, private hospitals like LECHL which provide high quality healthcare facilities at competitive costs and coupled with high success rate and growing credibility, can capitalize on the increasing health care needs of the western world. Healthcare industry is expected to get further boost with the opening up of the insurance sector to private players which will make healthcare affordable to a large number of people. Though there is an increasing preference for private medical care amongst the urban population due to the world class facilities offered by them, LECHL, with its limited presence may face tough competition from other established and bigger charitable institutions and private eye hospitals.
Source: Moneycontrol.com
Monday, June 16, 2008
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment