In the unofficial market, the issue is currently commanding a grey market premium of around 6%, indicating expectations of only modest listing gains despite strong headline financial growth.
Gujarat Kidney operates seven multi-speciality hospitals and four pharmacies across central Gujarat, with a focus on renal sciences and super-speciality care. The company has a total bed capacity of 490 beds, with an operational capacity of 340 beds, and offers secondary and tertiary healthcare services including urology, orthopaedics, cardiology, gynaecology and critical care. As of June 2025, the hospital network employed 89 doctors, over 330 nurses and more than 300 support staff.
Financially, the company has reported a sharp jump in earnings over the past two years. According to its restated consolidated numbers, total income rose to Rs 40.4 crore in FY25 from Rs 5.48 crore in FY24, while profit after tax increased to Rs 9.5 crore from Rs 1.71 crore.
EBITDA margins stood at about 41% in FY25, reflecting a significant improvement in operating leverage. The return on capital employed for the year was 37.65%, underlining the asset-light expansion strategy the company has adopted.
However, the steep improvement in margins and profitability has also raised questions around sustainability. At the upper end of the price band, the issue is valued at a pre-IPO price-to-earnings multiple of about 61.6 times, which is higher than most listed hospital peers.
Comparable companies such as Yatharth Hospital, GPT Healthcare and KMC Speciality Hospitals trade at meaningfully lower earnings multiples despite operating at a larger scale.The proceeds from the IPO will be used largely to fund inorganic growth and capacity expansion. The company plans to acquire Parekhs Hospital in Ahmedabad, increase its stake in Harmony Medicare in Bharuch, set up a new hospital in Vadodara and invest in advanced medical and robotics equipment. A small portion of the funds will also go towards debt repayment and general corporate purposes.
While the healthcare sector remains structurally attractive over the long term, analysts tracking the issue have flagged valuation risks and execution challenges given the company’s relatively smaller scale and aggressive expansion plans.
Should you subscribe?
In its IPO note, Swastika Investmart has advised investors to stay cautious, citing stretched valuations and limited near-term upside.
“The valuation appears aggressive at around 61x P/E, significantly higher than most listed hospital peers. Smaller scale increases risk, as execution delays or integration issues can materially impact earnings,” the brokerage said, adding that conservative and medium-term investors may be better off waiting for clearer post-listing price discovery before taking exposure.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)