The proposed initial public offering of Wockhardt Hospitals Ltd has been assigned an IPO grade of 4/5 by Fitch Ratings India.

Wockhardt Hospitals is planning to enter capital markets with an IPO of 25,087,097 equity shares of Rs 10 each for cash at a price to be determined through book building process. The company filed draft red herring prospectus with the Securities and Exchange Board of India on August 21, 2007.

The issue comprises a net issue to the public of 24,587,097 equity shares of Rs 10 each (the net issue) and a reservation of up to 500,000 shares for employees. The issue will constitute 28.77 per cent of the post-issue paid up equity share capital.

The company intends to utilise the proceeds from the issue to meet the cost of development and construction of greenfield and brownfield hospitals of the company, prepay some of the short term loans and to meet general corporate expenses.

The shares will be listed on Bombay Stock Exchange and National Stock Exchange.

Symbol - Series	WHL EQ
Issue Period	January 31, 2008 to February 05, 2008
Issue Size	25,087,097 Equity Shares
Issue Type	100% Book Building
Face Value	Rs. 10/-
Price Range	Rs 280 to Rs 310
Tick Size	Re. 1/-
Market Lot	20 shares
Minimum Order Quantity	20 shares
Maximum Subscription Amount for Retail Investor	Rs.100000
IPO Market Timings	10.00 a.m. to 5.00 p.m.
Joint Global Coordinators and the Book Running Lead Managers	Citigroup Global Markets India Private Limited and Kotak Mahindra Capital Company Limited
Book Running Lead Manager	ICICI Securities Limited and SBI Capital Markets Limited
Syndicate Member	Kotak Securities Limited
Categories	FI, IC, VC, MF, FII, FVCI, SIDC, PF, PEF, MLA, BDFI, CO, IND, HUF, NRI, OTH, EMP and DIR
No. of Cities with Bidding Centers	69
Inclusion in F&O Segment	Eligible, subject to SEBI approval
Name of the registrar	Intime Spectrum Registry Limited
Address of the registrar	C-13, Pannalal Silk Mills Compound,LBS Road, Bhandup (West),Mumbai - 400 078.
Contact person name number and Email id	Contact Person Mr. Vishwas Attavar,Tel 91 22 2596 0320,Fax 91 22 2596 0329,Email whl.ipo@intimespectrum.com
Prospectus	Click Here
Application Form	Click Here

Don’t Apply: (Experts say at MoneyControl)

Free pricing regime seems to mean issuing shares to promoters at par, or maybe, even at a discount while issuing to the public, 30 times of its face value. The company had issued 50 lakh shares of Rs 10 each, at par, on 11th June 2007, to the Chairman of the company Khorikawala. To add sweetener to this, bonus of 35% was issued on 3rd July, 2007. See, how generous, the companies are towards its promoters. This has led the paid-up equity of the company to rise to Rs 80 crore.

Inspite of the company’s hospital in operations, since 2002, financial performance is yet to catch on, especially on the bottomlines. Mumbai Hospital with 191 beds started in July 2002, while Bangalore Hospital with 92 beds started in 1991. FY 07 financial performance has been nothing great with total income at Rs.237 crores, PBT of Rs 16.18 crore and PAT of Rs 15.59 crore. For 9 months ending 31-12-07 total income was at Rs 260 corre with PBT of Rs 16.32 crore and PAT of Rs 7.31 crore. Thanks to Deferred Tax of Rs 6.55 crore, which has reduced the bottomline.

The company is now setting up 10 hospitals with an estimated outlay of Rs 636 crore, of which Rs 569 crores is being sourced from the proposed IPO. The total plan of the company is to set up 17 hospital with 3,419 beds. Rs 285 crore is being mobilized to liquidate the debt of the company, maybe to bring it on better financial parameters.

At the upper band, the company intends to mobilize about Rs 780 crore, of Rs.310 per share, by diluting 24.06% stake. This values the company at around Rs 3,200 crore excluding net debt of Rs 150 crore. Apollo Hospital with annual revenue of over Rs 1,000 crore and PAT of Rs 80 crore is valued at about Rs.2,300 crores, while expected EPS for FY 08 is close to Rs 20. This stock is ruling at a PE multiple of close to 22 on historic earning. Similarly, Fortis Health Care has a market capitalization of Rs 1,800 crore while adding debt thereto of Rs.600 crores, it works out at Rs 2,400 crore. Even Fortis has an annual topline of Rs 500 crore, though the company has yet to post its bottomline in black.

If established profit making company like Apollo Hospitals or company from Ranbaxy stable with promoters’ stake of 75% is available at much cheaper valuations, why to go for this issue, which is definitely very expensive. Afterall, one can’t pay such a steep price for having Wockhardt tag.

Cumulative Bid Details