Nephrocare Health Services IPO Enters Final Day with Subdued Investor Sentiment

Nephrocare Health Services IPO Enters Final Day with Subdued Investor Sentiment

The Rs 871-crore Initial Public Offering (IPO) of Nephrocare Health Services, India's largest provider of dialysis care, has entered its final bidding day on Friday. However, investor sentiment remains subdued, with the grey market premium (GMP) slipping to around 1.7%, down from the earlier 4.35% premium.

IPO Subscription Status

By the end of Day 2, the IPO was subscribed to just 36%, with bids for 48.58 lakh shares against the 1.33 crore shares available. The subscription levels remain soft, with Retail Individual Investors (RIIs) subscribing 45% of the 67.34 lakh shares reserved, Non-Institutional Investors (NIIs) subscribing 22% of the 28.86 lakh shares on offer, and Qualified Institutional Buyers (QIBs) subscribing 30% of the 36.78 lakh shares allocated.

IPO Overview

The IPO comprises a fresh issue of Rs 353 crore and an offer for sale of Rs 518 crore. The company intends to allocate Rs 129.1 crore to open new dialysis centres, Rs 136 crore towards debt repayment, and the remaining amount for general corporate purposes.

The grey market is currently trading at a modest 1.7% premium over the issue price, down from the previous 4.35%. This decline suggests a possible listing range of around Rs 468–469 and signals weakening sentiment among grey-market participants.

Company Overview

Nephrocare Health Services operates on an asset-light, cluster-driven expansion model and runs 519 clinics across 21 states and four union territories, with about 77% of its centres located in tier-II and tier-III cities. The company has expanded through both organic growth and strategic acquisitions, particularly in the Philippines, where it has bought 18 companies to enhance scale and profitability.

The company has delivered a sharp improvement in its financial performance, with revenue climbing from Rs 437 crore in FY23 to Rs 756 crore in FY25, and EBITDA rising from Rs 49 crore to Rs 167 crore. As a result, the EBITDA margin nearly doubled—from 11.1% to 22%—driven by improved international operations and tighter cost management.

Key Risks and Planned Use of Funds

Nephrocare relies heavily on captive clinics within private hospitals and on PPP arrangements with government bodies—both of which form a substantial share of its revenue. Any slowdown or challenges in renewal cycles could affect growth visibility. Additionally, receivable days remain elevated for PPP centres, which represent roughly 35% of the network.

Of the fresh issue proceeds, the company intends to allocate Rs 129.1 crore towards opening new clinics, Rs 136 crore for debt repayment, and the balance for general corporate needs.

Should You Apply?

SBI Securities has given the IPO a Subscribe rating, pointing to Nephrocare’s strong market position, expanding international footprint, and improving profitability. The brokerage recommends subscribing at the cut-off price, citing the company’s leadership and consistently strengthening margins.

Investors can apply in lots of 32 shares, with allocations earmarked as 50% for QIBs, 35% for retail investors, and 15% for NIIs. The book-built public offer will remain open until December 12, with a price band set at Rs 438–Rs 460 per share.