KIMS makes a decent stock market debut; here's your listing day strategy

Shares of KIMS (Krishna Institute of Medical Sciences) made a decent stock market debut on Monday. The stock opened for trading at Rs 1,009 on the National Stock Exchange, compared to the issue price of Rs 825, marking a premium of 22.30%. On the BSE, KIMS opened at Rs 1008.90, at a premium of 22.29%.

In the afternoon trade, the scrip dropped form its day’s high to Rs 991, up 20.12%. It swung between an intraday high of Rs 1057.95 and a low of Rs 950, on the BSE.

What should you do?

Commenting on the listing of KIMS Yash Gupta, Equity Research Associate at Angel Broking advised that long-term investors can book partial profit and hold remaining quantity as in long term company can perform well. KIMS is trading at Enterprise Value/EBITDA (Earnings Before Interest Tax Depreciation & Amortisation) of 21 times and Price to earnings of 37 times which is cheaper than the peers’ valuations along with that company has best Return of equity (ROE) & Return on capital employed (ROCE) of 23.8% and 24.8% respectively.

Likewise, Saurabh Joshi Research Analyst at Marwadi Shares and Finance suggested that “Investors should continue holding the stock from a longer-term perspective as the company is well-positioned to consolidate in India’s large, unorganized yet rapidly growing and underserved affordable healthcare market. The company is one of the largest corporate healthcare groups in AP and Telangana and is strategically growing its presence in adjacent markets as well. As far as valuation is concerned, the upper price band implies a PE of 32.13X on a post-issue basis which is reasonable considering the margin profile of the company and the growth opportunities that lies ahead.”

About KIMS

Incorporated in 1973, Krishna Institute of Medical Sciences Limited (KIMS) is one of the largest healthcare groups in AP and Telangana. KIMS provides multi-disciplinary healthcare services with a key focus on primary, secondary, & tertiary care in tier 2-3 cities. As of March 31, 2021, it operates through 9 multi-speciality hospitals under the brand name of “KIMS Hospitals” with an aggregate capacity of 3,064 beds.

The Rs 2,143.74 crore-public issue which raised money between June 16 to Jun18 received bids for 5,56,55,046 shares as against 1,44,13,073 shares on offer, according to the stock exchange data. The issue was subscribed 3.86 times. The portion reserved for retail investors was subscribed 2.89 times, the qualified institutional buyers category was subscribed 5.26 times and the non-institutional category received 1.89 times subscription.

The IPO comprised of a fresh issue of Rs 200 crore and an offer for sale of up to 2,35,60,538 equity shares. The offer for sale consists of up to 1,60,03,615 equity shares by investor General Atlantic Singapore KH Pte Ltd; 3,87,966 equity shares by Dr Bhaskara Rao Bollineni; 7,75,933 equity shares by Rajyasri Bollineni; 3,87,966 equity shares by Bolllineni Ramanaiah Memorial Hospital; and 60,05,058 shares by other selling shareholders.

The net proceeds from the fresh issue will be utilised for repayment of certain borrowings (Rs 150 crore) availed by the company and its subsidiaries viz KHKPL, SIMSPL and KHEPL; and for general corporate purposes.

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