CNBC TV18
By Priyanka Deshpande
Published Jan 10, 2024
Medi Assist Healthcare Services, a third-party administration services to insurance companies, has set the price band for its initial public offering (IPO) at ₹397-418 per equity share.
The IPO is worth up to ₹1,171.58 crore and will open on January 15. Here’s are some key management takeaways ahead of the IPO.
The company was incubated by a former Infosys founder NS Raghavan, which was later acquired by Anil Ambani’s Reliance Health.
Bessemer Health Capital and Vikramjeet Chhatwal via management coup took over the reins of the company
Company generates revenue solely from insurance companies, earning a yield/fee of 3.5-5.5% on the gross premium it manages.
Yield (fee charged as a % of premium managed) has been stable despite competition.
The company has grown faster than the industry & there is no reason to believe historical growth rates will not continue as long as the industry keeps growing.
Company’s EBITDA margins of ~23% are higher than the industry margins of low double digit.
Company has historically seen ~25% growth rate with stable margins (~23%)
Margins aided by focus on Tech and 94% annual retention rate with clients.
Promoter stake to come from 77% to 40% post the OFS.
No need to raise fresh money via the IPO as the company is profitable and is cash generating. Cash on the books at ₹145 crore as of September 30th.
Company has funded all its acquisitions via internal cash generation. 90-95% of the EBITDA gets converted to free cash flow.
The company, with 7 acquisitions in the last 8 years, anticipates that the low margins of acquired companies Raksha and Medvantage will not negatively impact consolidated margins.
No M&A opportunities at the moment, but the company is opportunistic.
The company is not concerned about the high dependence on top 5 clients; their contribution to revenue is approximately 71% as of September 2023, down from 78% in FY23.
Thanks For Reading!