Inventurus Knowledge Solutions Ltd IPO | News | Overview | Verdict

IPO listed on 19 Dec'24

Inventurus Knowledge Solutions Ltd

Minimum Investment

₹ 14,619 / 11 shares

Grey market premium

₹ 421 (32% premium)

Issue price

₹ 1329

Listing price

₹ 1,900

Listing gains

571 (43%)

Listing on

Dec 19, 2024

Our Verdict:

Inventurus Knowledge Solutions Ltd (IKSL) has shown strong growth in both revenue and profits in recent years, maintaining an impressive operating margin of 38% and zero debt through FY23. Although last year’s acquisition of Aquity for $221 million introduced some debt, this has been substantially reduced as of September 2024.
In terms of valuation, the IPO appears fully priced with a P/E ratio of 59x based on FY24 earnings. There are no directly listed competitors for comparison. While the valuation may appear high at first glance, it seems justified given the vast opportunities and the company's solid growth trajectory.
The $4.8 trillion US healthcare industry is growing at a stable rate of 8% annually, presenting significant opportunities. IKSL, which offers 16 different services, is positioned in a market worth $222 billion, with only $34 billion currently outsourced. This suggests substantial growth potential for industry participants.
Thus, IKSL's IPO represents a chance to invest in the burgeoning US healthcare outsourcing sector, which continues to grow steadily and remains under-penetrated. Given these aspects, investors may consider subscribing to the IPO from a long-term perspective.

About the company

Founded in

5 Sep'06

Managing director

Sachin Gupta

IKSL is a technology-driven healthcare solutions provider specializing in a care enablement platform that enhances revenue optimization for healthcare organizations in the US, Canada, and Australia, with a primary focus on the US market.
The platform supports healthcare providers by managing administrative, clinical, and operational tasks, allowing them to concentrate on patient care. IKSL combines technology with skilled resources to sustain strong healthcare enterprises. Its pricing model includes outcome-based fees, accounting for 40% of its revenue, while the rest comes from software-as-a-service (SAAS) fees. Currently, the company offers 16 services across two main bundles: administrative (37% of revenue) and clinical (63% of revenue).

STRENGTHS

Strong Financial Performance: IKSL has achieved impressive growth, with operational revenue, EBITDA, and net profit recording robust compounded annual growth rates (CAGRs) of 54%, 37%, and 26%, respectively, between FY22 and FY24. Additionally, it boasts a Return on Equity (RoE) of 32%.
Wide Clientele: As of September 30, 2024, IKSL serves 778 healthcare organizations, including health systems, academic medical centers, multi-specialty and single-specialty medical groups, ancillary healthcare providers, as well as inpatient and outpatient care organizations. Notable clients include Mass General Brigham Inc., Texas Health Care PLLC, and The GI Alliance Management.
Client Loyalty: Over 90% of IKSL's revenues over the last three fiscal years have come from repeat clients, showcasing a stable and loyal customer base.
Strategic Acquisition: The acquisition of Aquity Holdings provides access to a customer base of over 804 clients (as of March 31, 2024), facilitating cross-selling opportunities and expanding market reach.

RISK FACTORS

Declining Margins: EBITDA margins have consistently declined from 36.33% in FY22 to 28.62% in FY24, while net profit margins dropped from 30.51% to 20.38% over the same period. This decline is primarily attributed to the $220 million Aquity acquisition last year, which led to increased leverage and suppressed operating margins in FY24.
Heavy Dependence on the US Market: IKSL derives nearly 96% of its total revenue in H1FY25 from US customers, making it highly vulnerable to risks such as exchange rate fluctuations, regulatory changes, and geopolitical uncertainties.
High Attrition Rates: Attrition remains a significant challenge, with rates recorded at 14%, 45%, and 54%, for the six months ending September 30, 2024, FY24 and FY23, respectively. Persistent high turnover could lead to increased staffing costs, shortages of skilled personnel, and potential disruptions from labor union activities.
Regulatory Compliance Issues: IKSL has previously encountered FEMA-related compliance deficiencies, including delays in reporting requirements and the issuance and transfer of securities. The company has submitted compounding applications to the RBI, which remain pending. This situation may expose IKSL to regulatory actions, penalties, or compounding fees.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 2,497.92 crore

Fresh Issue

₹ -

OFS

₹ 2,497.92 crore

Price range

₹ 1,265 - 1,329

Lot size

11 shares

Issue Objective

This is a pure Offer for Sale (OFS) and hence, the company will not receive any proceeds from the issue. The funds will be directed to the selling shareholders.

Dates

Bidding open

12 Dec'24

Bidding close

16 Dec'24

Allotment date

17 Dec'24

Refund date

18 Dec'24

Listing

19 Dec'24

IPO Reservations

Qualified institutional buyers

>75%

Non-institutional investors

<15%

Retail individual investors

<10%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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