Nephrocare Health Services Ltd.

Encouraging Prospects but Tightly Priced

Incorporated in 2009, Nephrocare Health Services Ltd. (NHSL) provides dialysis healthcare services. Globally, it ranks as the fifth-largest dialysis service provider by number of treatments performed in Fiscal Year 2025 and is Asia’s largest. In India, it commands over 50% revenue market share in the organized dialysis services segment.

As of September 2025, NHSL operates a network of 468 clinics across 21 States and 4 Union Territories, spanning over 288 cities, with approximately 77% of clinics located in Tier II and Tier III cities. The company has also expanded internationally with 51 clinics in the Philippines, Uzbekistan, and Nepal, and has entered the Kingdom of Saudi Arabia (KSA) market through a joint venture in FY24.

Offer Details

• The company is raising Rs 871 crore including a fresh issue of Rs 353 crore. Proceeds from the fresh issue will be used to:
• Fund expansion by opening new dialysis clinics – Rs 129 crore
• Repay borrowings – Rs 136 crore
• Post-IPO, promoters’ stake will reduce to 71.5% from 78.9% pre-IPO.

Financial performance

During a press conference, the management highlighted that it took nearly 10 years for the company to become EBIDTA positive and 13 years to report a net profit. The business operates on low margins but requires scale to generate meaningful profits.

Between FY23 and 2025, the company achieved a CAGR of 31.5% in revenue. EBIDTA grew by 82% during this period as the scale of operations expanded. This growth translated into a profit of Rs 67.1 crore in FY25, compared with a loss of Rs 11.8 crore in FY23.

                                                                                  (Rs in crore)

NHSL’s business is expected to grow at a healthy pace, with revenue projected to cross Rs 17,500 crore by 2029. The dialysis industry is witnessing increasing demand, driven by India’s high prevalence of diabetes and hypertension, which are primary contributors to chronic kidney disease (CKD). The company currently holds an estimated 10% market share of India’s total dialysis patient base. With over 5,500 dialysis machines, it treated 31,046 patients, providing approximately 1.6 million treatments. Partnerships with established hospital chains such as Max and Fortis provide an additional revenue stream.

According to the company, less than 10% of dialysis patients in India currently receive treatment, while in the Philippines only 19% of patients are treated. This indicates substantial potential for market expansion both domestically and globally.

NHSL has a clear strategy of focusing exclusively on dialysis healthcare services, aiming to achieve higher operational scale and improved profitability. Compared with the asset-heavy hospital sector, which commands P/E ratios of 50–70 times, asset-light models like dialysis benefit from EV/Revenue multiples of 8–9x (as seen in diagnostics peers) and offer quick returns on investment due to standardized protocols and high utilization rates of 70–75%. Growth CAGRs favor dialysis at 20–22%, compared with 18% for hospitals and 13% for diagnostics.

The IPO is priced at Rs 460 per share, implying a P/E of 56 times based on the historical EPS of Rs 8.3, suggesting that the issue is tightly priced.

Disclaimer:

The writer is not a SEBI-registered analyst. Neither the writer nor their friends or relatives may or may not participate in the IPO. This article is intended solely for educational purposes. Investors are advised to consult their financial advisors before making any investment decisions. Grey market indications should be treated only as a reference and not as a reliable benchmark for listing performance.