Shares of Manipal Health Enterprises, which made a strong stock market debut on Wednesday, fell nearly 6% to an intraday low of Rs 626 on Thursday, down from the previous close of Rs 666 on the BSE.
The stock had listed at Rs 655, a premium of nearly 11% over its issue price of Rs 590. The debut was well above grey market expectations, where the stock had indicated a listing gain of only around 1% ahead of its market debut.
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Shivani Nyati, Head of Wealth at Swastika Investmart, said that despite the positive listing, the stock is trading at a premium valuation with limited margin of safety. A major portion of the IPO proceeds will be used to repay acquisition debt, leaving limited funds for future expansion, while the company also remains highly dependent on Karnataka, which contributes nearly 46–60% of its revenue.
She further said that, “Investors who received the allotment can continue to hold the stock, while fresh investors should wait for better entry levels or signs of further debt reduction before buying. Maintain a stop-loss at Rs 620 to protect listing gain.”
The company's Rs 9,275 crore IPO was subscribed 4.92 times overall. The public issue comprised a fresh issue of 13.56 crore equity shares worth Rs 8,000 crore and an offer for sale of 2.16 crore shares aggregating Rs 1,275.22 crore, taking the total issue size to Rs 9,275.22 crore.
SBI Securities, which has assigned a Subscribing for long term rating, said the company is India's largest multi specialty healthcare provider by bed capacity and holds leadership positions across key metro cities.
It also mentioned Manipal Health's strong track record of strategic acquisitions, which have helped expand scale, improve operating leverage, widen its geographic presence and strengthen its competitive position.
The company plans to allocate a significant portion of the fresh issue proceeds towards strengthening its financial position.
Around Rs 5,378 crore from the IPO proceeds will be used for debt repayment, helping reduce borrowing costs and improve the balance sheet. Another Rs 574 crore is planned for acquiring a minority stake in its step-down subsidiary, Sahyadri Hospitals. The remaining funds will be utilised for general corporate purposes and supporting future expansion plans.
Over FY26 to FY30, the company plans to add 2,426 beds, including 1,943 through greenfield projects and 483 through brownfield expansion. SBI Securities also expects profitability to improve on the back of the Sahyadri Group integration and lower interest costs following debt repayment using 69% of the IPO proceeds.
Also Read | Manipal Health Enterprises shares list at 11% premium over IPO price on BSE, NSE
Angel One, however, believes the valuation remains stretched. At the upper price band of Rs 590, the issue is valued at a post-issue FY26 P/E of 84.65x, which the brokerage considers expensive. While it acknowledged the company's strong pan-India hospital network, leadership in key markets and favourable long-term industry prospects, it believes much of the expected growth is already priced in.
As a result, Angel One recommends a Neutral stance for medium- to long-term investors despite the company's strong fundamentals.
Founded in 2010, Manipal Health Enterprises has emerged as one of India’s leading healthcare providers, with a wide network of multi-speciality hospitals, clinics and diagnostic centres.
The company provides advanced tertiary and quaternary healthcare services across key specialties, including oncology, cardiology, neurology, orthopaedics, organ transplantation and preventive healthcare.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
