IPO listed on 22 Jan'24
Medi Assist Healthcare Ltd
Minimum Investment
₹ 14,630 / 35 shares
Grey market premium
₹ 30 (7% premium)
Issue price
₹ 418
Listing price
₹ 460
% since launch
Listing on
Jan 23, 2024
Our Verdict:
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- The firm has shown impressive financial growth and solidified its position as a market leader in India’s group health insurance market, along with a history of generous dividend payouts.
- In terms of valuation, the IPO may appear somewhat expensive, with a Price-to-Earnings (P/E) ratio of 38x based on FY23 earnings. However, even though the valuation might seem pricey compared to the return ratios, the premium pricing is considered reasonable in light of the company's steady revenue generation and its prominent position in an expanding industry.
- Considering the favourable industry trends and the firm’s advantageous position, the stock is anticipated to yield good returns in the long term. Therefore, it would be prudent for investors to consider subscribing to the IPO with a long-term investment outlook.
About the company
Founded in
7 Jun'00
Managing director
Vikram Jit Singh Chhatwal
- Medi Assist Healthcare Ltd (MAHL) specializes in providing third-party administration (TPA) services to insurance companies via its wholly-owned subsidiaries, including Medi Assist TPA, Medvantage TPA, and Raksha TPA. The firm plays a key role in bridging the gap between (a) insurance firms and their policyholders, (b) insurance companies and healthcare providers like hospitals, and (c) the government and public health scheme beneficiaries.
- As of September 30, 2023, MAHL had partnerships with 35 insurance companies both in India and abroad. In FY23, it handled health insurance premiums amounting to Rs 14,574.64 crore, covering both group and retail segments and provided services to over 9,500 group accounts spanning various sectors, assisting in the administration of their employees' insurance needs.
STRENGTHS
- Dominance in Health Insurance Market: In FY23, MAHL commanded a significant 26.4% share of India's group health insurance market, nearly five times the market share of its closest competitor in the sector serviced by third-party administrators in FY22.
- Strong Financial Performance: MAHL exhibited remarkable growth from FY21 to FY23, achieving a Compound Annual Growth Rate (CAGR) of 25% in Revenue from Operations, 26% in EBITDA, and 41% in Net Profit.
- Impressive Return Ratios: As of FY23, MAHL's Return on Net Worth (RONW) stood at 19.63%, while the Return on Capital Employed reached 24.95%.
- Substantial Growth in Premium Management: The premium under MAHL's management witnessed a 36% CAGR growth, escalating from Rs 7,918.5 crore in FY21 to Rs 14,574.6 crore in FY23.
- Established Insurance Company Relationships: MAHL has maintained long-term relationships with insurers, averaging 20 years with 4 PSU insurance companies and 9 years with 23 non-PSU insurers as of September 30, 2023.
- Increasing Market Share: MAHL's share in managing retail and group benefits administration premiums from non-PSU insurers rose from 14.65% in FY21 to 21.26% in FY23, further increasing to 24.33% by September 30, 2023.
- Shareholder-Oriented Approach: MAHL demonstrates a commitment to its shareholders through consistent dividend distributions, with payouts of 50% in FY22, and 37.8% in both FY23 and the period ending September 30, 2023.
RISK FACTORS
- Client Dependence: MAHL's income heavily relies on a few clients. In FY23 and the first half ending September 30, 2023, its top five clients made up 77.97% and 71.03% of its contract revenues, respectively. Losing any of these clients could significantly impact the business.
- Industry-Specific Reliance: MAHL's reliance on specific industry group accounts is notable. In FY23, and the first half of FY24, the IT/ITES sector accounted for 45.68% and 46.11% of the total premiums from its top 50 group accounts, while the BFSI sector contributed 20.57% and 22.53%, respectively. Negative shifts in these sectors could harm the business.
- Regulatory Compliance Issues: Its subsidiaries, Medi Assist TPA, Raksha TPA, and Medvantage TPA, have previously been issued show cause notices by IRDAI. Failure to comply with IRDAI regulations could negatively affect the business.
- Legal Challenges: MAHL, its directors, promoters, and subsidiaries are involved in legal proceedings, including two criminal cases against subsidiaries and one against directors. Any adverse court or tribunal decisions could impact the business.
- Cash Flow Concerns: As of September 30, 2023, MAHL experienced negative cash flows from operations. Persistent negative cash flows could significantly hamper its operational capabilities and growth strategies.
- Statutory Payment Issues: MAHL has had issues with timely payments of statutory liabilities, including provident fund, labor welfare fund, and tax deductions. Continued defaults or delays could lead to financial penalties.
Issue details
Issue type
Mainstream
Issue size
₹ 1,171.58 crore
Fresh Issue
₹ -
OFS
₹ 1,171.58 crore
Price range
₹ 397 - 418
Lot size
35 shares
Issue Objective
This issue is a pure Offer for Sale (OFS), which means the company will not receive any proceeds from the offer. All the offer proceeds will be received by the selling shareholders, in proportion to the shares sold by them.
Dates
Bidding open
15 Jan'24
Bidding close
17 Jan'24
Allotment date
18 Jan'24
Refund date
19 Jan'24
Listing
22 Jan'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
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