SKIP / AVOID the IPO of Birla Pacific Medspa - keynote

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 note of the IPO of Birla Pacific Medspa Ltd.

Issue Highlights

Price Band                                                 :       Rs10 – 11 per share

Minimum Bid Lot Size                               :       500 Equity Shares

Maximum Bid Lot Size                               :       18,000 Equity Shares

IPO opens during                                       :       June 20 – 23, 2011

Book Running Lead Manager                     :       Arihant Capital Markets Limited

To list on                                                   :       BSE

IPO Grading                                               :       2 / 5 (Brickworks Ratings)

Market Cap post-listing                              :       Rs116.84Cr or $26mn (based on the cap price)

Market Cap of Free Float                            :       Rs83.38Cr or $18.6mn (based on the cap price)      

IPO of 59.25mn equity shares of Rs10each, aggregating to Rs65.18Cr or $14.5mn (at the cap price).

Executive Summery

Ø  Birla Pacific Medspa Ltd. (BPML) operates Spas in India and abroad for beauty and healthcare treatment and presently operates a med spa centres under the brand name “EVOLVE”. A med spa or medical spa is a hybrid between a medical clinic and a day spa and operates under the supervision of medical doctor.

Ø  Evolve Med Spa, offers comprehensive treatments in the areas of Cosmetic Dermatology, Cosmetic Surgery and Advanced Dentistry. It also offers a range of spa services – wet & dry under its wellness initiative.

Ø  The health industry has emerged as one of the most challenging sectors as well as one of the largest service sector industries in India with estimated revenue of $35bn; it constitutes 5.2% of India’s GDP and employs 4mn people.

Ø  The healthcare industry in the country, which comprises hospital and allied sectors, is projected to grow 23% per annum to touch $77bn by 2012 from the current estimated size of $35bn, according to a Yes Bank and an industry body report published in November 2009.

Our View

Though, the company is in fast growing sector in India, the current poor financial performance as well as the negative growth of group companies we advise the investors to skip the issue.