Paras Healthcare IPO Opens at Rs 660-693 Price Band

Paras Healthcare's Rs 1,450 crore initial public offering opened for subscription on October 21, with a price band of Rs 660 to Rs 693 per share and a grey market premium pointing to a modest listing gain. The Paras Healthcare IPO, the hospital chain operator's maiden public issue, will remain open for bidding until October 23. On day one, the issue was subscribed 0.15 times overall, with retail investors leading demand at 0.69 times their allotted portion.

Paras Healthcare IPO price band and issue size

The Rs 1,450 crore offer combines a fresh issue of 72.15 lakh shares worth Rs 500 crore with an offer for sale of 1.37 crore shares aggregating to Rs 950 crore. Selling shareholders Dharminder Kumar Nagar and Commelina will offload shares through the offer-for-sale route, while the fresh capital goes to the company. The lot size is 21 shares, which means a retail applicant needs at least Rs 14,553 to bid at the upper end of the price band. JM Financial, BofA Securities India and Nuvama Wealth Management are the book-running lead managers, and MUFG Intime India is the registrar.

A day before the issue opened, Paras Healthcare raised Rs 652.5 crore from anchor investors, according to the Economic Times. The anchor book included the Abu Dhabi Investment Authority, BlackRock Global Funds, Eastspring Investments, Government Pension Fund Global, Natixis International Funds, Integrated Core Strategies (Asia) and Citigroup Global. Anchor participation of that size usually signals institutional comfort with the pricing.

How the Paras Healthcare IPO was subscribed on day one

Subscription data from the NSE showed the Paras Healthcare IPO received bids for 17,78,637 shares against 1,20,83,331 shares on offer by 5 pm on October 21, or 15% of the issue. Retail investors subscribed 69% of their portion, while non-institutional investors bid for 8% of theirs. Qualified institutional buyers were yet to place bids on the first day, a pattern that often reverses in the final hours when large investors enter.

The grey market premium stood near Rs 50 per share, about 7% above the upper price band of Rs 693. At that premium, the implied listing price works out to roughly Rs 743 per share, or a gain of about Rs 1,050 on one lot of 21 shares. Grey market premiums are unofficial and can move quickly, but the reading suggests investors expect a single-digit listing pop rather than a blockbuster debut.

What the Paras Healthcare IPO proceeds will fund

Of the Rs 500 crore fresh issue, Paras Healthcare plans to use Rs 302.9 crore to repay debt taken by the company. Another Rs 54.1 crore will go into its wholly owned subsidiary PMHPL, which operates the company's hospitals in Srinagar, to prepay that unit's borrowings. The balance will be used for general corporate purposes. The company operates hospitals under the Paras Health brand.

Debt repayment is the centrepiece of the Paras Healthcare IPO fresh issue. Paras Healthcare carries significant borrowings, and analysts tracking the issue have noted that while the IPO proceeds help, they do not fully repair the balance sheet. The company's financials show revenue growth with a recent return to profit, which the management will need to sustain to justify the pricing.

GMP and listing timeline

Allotment of shares is expected to be finalised on October 26, and the shares are tentatively scheduled to list on the BSE and NSE on October 28. Investors who bid will know their allotment status a day before listing week begins. The Paras Healthcare IPO is one of several large issues in a crowded primary market week. How the Paras Healthcare IPO lists will test appetite for hospital chain stocks at current valuations.