Medi Assist Healthcare IPO Review
Medi Assist Healthcare IPO Review: Have you ever wondered how major corporations seamlessly purchase and manage insurance for thousands of employees? Do you think insurance companies will go through the hassle of onboarding all these employees and resolving all claims when they come in?
Here’s a company that makes life easier for insurance companies and employers. The company is called Medi Assist Healthcare. Third Party Administration (TPA) Services.
Medi Assist Healthcare IPO Review
The company is planning an initial public offering (IPO) of 500 billion won. 1,171.58 Cr will be released on January 15, 2024. The issue will close on January 17 and be listed on the exchange on January 22, 2024.
About Us
Medi Assist Healthcare Services provides third-party administrative services, such as customer service and network management, to companies that issue insurance. The company provides services to more than 35 insurance companies at home and abroad.
As of FY22, Medi Assist TPA had a market share of 14.83% in the retail health insurance market and 41.71% in the group health insurance market. In FY23, the company managed Rs. Health insurance premiums worth 14,574.65 Cr combined, both group and retail.
Through its international subsidiary, Mayfair Group, Medi Assist provides hospitalization, call center, billing and claim processing services in the UK, Australia, Singapore and many other countries.
The company has developed a provider network of 18,754 hospitals across 1,069 cities and 31 towns. It also covers over 141 countries worldwide.
Medi Assist served over 9500 group accounts across the sector managing the insurance requirements of the company. As of 2023, the company managed over 50 billion won. The group health insurance premium worth ₹12,818 Cr represents approximately 28% of the total group health insurance market in India.
On a private insurer basis, the company managed over Rs. With 1757 Cr worth of insurance products, it accounts for 5.06% of the Indian retail health insurance market.
industry information
The industry analysis is conducted as per a report published by Frost & Sullivan (India), which has conducted an independent market assessment of third party managers in the Indian health insurance industry.
According to the report, India’s out-of-pocket expenses (OOP) stood at 50.59% in FY21. OOP is higher compared to Asian countries, where it ranges from 30-35%, and even this figure is much higher than the WHO’s figure of 15-20%.
High OOP places significant burden on Indian households. This situation is further aggravated by the severe healthcare inflation that India faces in the range of 8.65% in 2021 and 13.6% in 2022.
Although this scenario is detrimental to the national economy, it presents an opportunity for companies serving the underlying insurance industry. Increasing OOP spending is encouraging individuals to demand voluntary health coverage.
Health is the fastest growing insurance sector in India, growing at a compound annual growth rate (CAGR) of 18.45% from FY17 to FY22. This segment accounts for over 36.48% of the total premiums collected in the country. COVID-19 was the biggest catalyst for the health insurance industry, causing domestic insurance penetration to surge by 31%.
Medi Assist Healthcare IPO – Finance
Medi Assist reported revenue of Rs. 519 Cr in FY23, up 26% from Rs. 412 Cr in FY22. Revenues grew at a CAGR of 22.55% since FY21.
This year’s net profit increased 15.3% to 190 million won. 64 Cr in FY22 to Rs. 74Cr in FY23. However, over the past three years, net profit has grown at a CAGR of 68% since FY21.
Standalone Medi Assist’s EBITDA margin is 23%, while subsidiary Raksha & Medvantage’s EBITDA margin is 6.43% and -54.73%. In terms of ROE, Medi Assist has an ROE of 19.63%. Raksha’s ROE is 7.02% and Medvantage is not yet profitable.
As of FY23, the company’s basic earnings per share is 10.76 times. At the high end of the price range of Rs. According to 311, the company’s price-to-earnings valuation is 38.84 times.
In H1FY24, the company turned net operating cash flow negative with negative cash flow of Rs. 18.91Cr. This is because trade receivables increased by 500 billion won. 84Cr.
Medi Assist Healthcare IPO Review – Key Players
Medi Assist is registered as India’s first Third Party Insurance Administrator (TPA) company. Because of this, we are unable to compare the Company with other listed companies. But let’s take a look at how the company fares compared to its privately held competitors.
Medi Assist is the largest company in the TPA space by revenue. In terms of EBITDA and PAT margins, the company also continues to lead with industry-leading margins.
The company’s ROE and ROCE are also reputed to be 19.63% and 21.67%, respectively. These ratios show that the company has fundamentally solid earnings and maintains low debt.
Company Strengths
- Together with its subsidiaries, the company holds a 30.03% market share in group insurance and a 6.98% market share in retail insurance.
- Medi Assist’s technology platform integrates with insurance companies to enable faster claim resolution and reduced costs.
- The company has a pan-India network of 18,754 hospitals across 1069 cities and 31 states.
- Medi Assist has successfully acquired businesses, integrated them within the group and built synergies across these subsidiaries. We plan to acquire more companies in the future.
company’s weaknesses
- The company has significant revenue concentration risk, with its top five customers contributing 81.54% of FY23 revenue.
- The business is highly dependent on IT sector and BFSI sector at 46% and 21% respectively.
- In H1FY24, the company’s net operating cash flow was Rs. -18.91 Cr, which is due to a surge in accounts receivable of Rs. 84Cr.
- A PE valuation of 39x is quite high for a company that has grown its revenue at just 23% CAGR since FY21.
Medi Assist Healthcare Service IPO – GMP
Shares of Medi Assist Healthcare Ltd were trading at a premium of 19.38% in the gray market on January 10, 2024. The stock in Gray Market was trading at Rs 499. This gives a premium of Rs 81 per share to the ceiling price of Rs 418. .
Medi Assist Healthcare IPO Review – Key IPO Information
promoter: Dr. Vikram Jit Sigh Chhatwal, Medimatter Health Management Pvt Ltd, Bessemer India Capital Holdings H Ltd.
Book Operations Lead Manager: Axis Capital Ltd, IIFL Securities Ltd, Nuvama Wealth Management Ltd and SBI Capital Markets Ltd
Proposal registered by: Link Intime India Pvt Ltd
purpose of the problem
The main objective of the offer is to provide a timely and profitable exit to the promoters and get the benefit of listing their shares on the stock exchange.
conclusion
The company, Medi Healthcare, has found a sweet spot in acting as an intermediary between insurance companies and businesses or individuals who need insurance. This allows the company to carve out a niche while providing seamless insurance payments.
Business looks good, but the value the company is asking for seems higher. Additionally, H1FY24 net profit is less than half of FY23 performance, signaling a slowdown in performance.
With all this in mind, what do you think of the company? Let us know in the comments below.
Written by Nasir Hussein
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