Last Updated on February 23, 2026 by Rajat Bhati

The Indian fertility landscape is witnessing a landmark moment as Gaudium IVF & Women Health prepares to be the first pure-play In-Vitro Fertilization (IVF) provider to list on the mainboard. With a price band of INR 75 – 79, a total issue size of INR 165 crore, and a market narrative centered on “SOP-driven clinical excellence,” the IPO has grabbed headlines.

However, for investors, the “hope” of a growing industry must be scrutinized against the cold, hard facts of the balance sheet. A forensic deep-dive into the Red Herring Prospectus (RHP) and recent financial performance reveals several structural “red flags” that go beyond typical disclosure boilerplate. From a massive tax shadow to alarming attrition rates and a curious revenue pivot, here is a detailed breakdown of the top risk factors in Gaudium IVF IPO.

List of Top Risk Factors in Gaudium IVF IPO

The Financial Governance Crisis: A 76% Net Worth Shadow

The most staggering figure in the Gaudium IVF RHP is not its growth, but its potential liability. As of 30 September 2025, the company reported contingent liabilities of INR 44.99 crore. When compared against the company’s Net Worth of INR 58.85 croe, these liabilities represent nearly 76.4% of its entire equity base.

The IT Survey and “Unaccounted Cash”

The nature of these liabilities is particularly alarming. Following an Income Tax survey under Section 133A conducted at the company’s premises, the department raised demands totaling INR 24.44 crore for Assessment Year 2022-23 alone. The specific allegations mentioned in the RHP point toward deep governance gaps:

• Surrogacy Transactions: The IT Department allegedly found evidence of “loose documents” and unaccounted cash from 74 surrogacy patients.
• Undisclosed Income: The department has assessed undisclosed income worth INR 25.02 crore for FY 2022-23 and INR 7.4 crore for FY 2023-24 for the company. Additionally, Promoter Dr. Manika Khanna faces personal allegations of INR 5 crore in undisclosed income.

The Immediate Cash Strain

To obtain a stay on these massive demands, the company is required to deposit INR 6.17 crore (representing 20% of the total demand of INR 30.89 crore) through monthly installments. For a company of this size, this creates a persistent liquidity drain. If these cases—which are currently being contested in appeal—materialize against the company, it could effectively wipe out a majority of its net worth, leaving investors in a precarious position.

The “Pharmacy Pivot”: Masking Core IVF Stagnation

Gaudium’s top-line revenue shows an impressive jump from INR 44.24 crore in FY 2023 to INR 70.72 crore in FY 2025. However, a forensic analysis of the quality of this revenue reveals a dramatic shift in the business model.

The IVF vs. Pharmacy Conflict

The data reveals a “Pharmacy Pivot.” The core IVF business, which management touts as their primary expertise, has shrunk as a percentage of total revenue. More concerningly, while revenue grew in FY 2025, the actual number of cycles declined.

The growth in the top line was propped up by the Pharmacy business (via subsidiary Gaudium International Pvt Ltd), which grew from a negligible INR 22 lakhs to INR 14.28 crore in the first half of FY 2026.

Information Opacity

Despite Pharmacy now contributing nearly 29% of total revenue, the RHP offers very little operational detail about this segment. For an investor, this shift is critical because pharmacy/trading businesses typically command much lower valuation multiples than specialized clinical services. If Gaudium is becoming more of a “chemist” and less of a “clinic,” the 25x P/E valuation starts to look expensive.

Human Capital Crisis: A 63% Attrition Disaster

In a service-oriented healthcare model, clinical stability and patient trust are the primary assets. Gaudium’s employee data, however, tells a story of extreme volatility.

• Staggering Turnover: The company reported an attrition rate of 63% in FY 2025 and 51% in FY 2024. In simple terms, more than half of the workforce is leaving every year.
• Key-Person Risk: The business is “heavily dependent” on its Promoters, Dr. Manika Khanna and Dr. Peeyush Khanna. The RHP explicitly states that their departure would be catastrophic for the company’s strategy and capital-raising abilities.
• Single-Doctor Vulnerability: While Gaudium has 30+ locations, the medical talent is spread extremely thin. Many of their “spoke” centers (and even hubs like Mumbai, Ludhiana, and Bengaluru) rely on just one doctor.

Management claims to be “SOP-driven” to allow for scalability, but an organization cannot maintain a consistent 58% success rate when the doctors and nurses executing those SOPs are in a constant state of churn.

Gaudium IVF IPO Risks: Downward Trend of Return Ratios

Efficiency ratios are the ultimate truth-tellers for an IPO. For Gaudium IVF IPO red flags, these ratios are in a clear state of decay as the company attempts to scale.

• ROCE Collapse: The Return on Capital Employed (ROCE) plummeted from 54.40% in FY 2023 to 39.70% in FY 2025. This indicates that the company is becoming significantly less efficient at generating profit from its capital.
• RONW Drop: Return on Net Worth (RONW) fell from 59.11% to 41.71% in the same period.
• Net Margin Compression: Despite the “growth” story, Net Income Margins have dropped from 30.58% in FY 2023 to 25.28% in H1 FY 2026.

This decay suggests that the “Hub and Spoke” model is facing significant headwinds as it moves into newer, less mature markets.

Promoter Economics and Related Party Transactions (RPTs)

The financial relationship between Gaudium and its promoters involves several high-value transactions that raise questions about the alignment of interests.

• The GAAT Advance: In FY 2024, the company paid an INR 2.5 crore advance to Dr. Manika Khanna personally for the development of the “GAAT” (Gaudium Advanced Analysis and Treatment) module. This is currently recorded as an “Intangible Asset Under Development.” Paying such a significant advance to a promoter for an in-house module is a transaction that institutional investors often view with skepticism.
• Recurring Fees & Rents: In FY 2025, Dr. Manika Khanna received INR 1.8 crore in professional fees and INR 1.2 crore in rent. These fees are not fixed and can be adjusted, potentially impacting minority shareholder returns.
• Trademark Rights: The company relies on 61 trademarks assigned by the promoter. However, the legal process for registration and assignment for several of these remains pending.

Execution Risks: Massive Expansion in a Short Time

The core objective of the INR 90 crore fresh issue is to establish 19 new IVF centers over the next three years. However, the company appears to be in the very early stages of this massive undertaking.

• No Identified Premises: As of the RHP date, the company has not identified or leased a single location for the 19 proposed centers.
• No Firm Equipment Orders: While the company has “quotations” for medical equipment, no firm orders have been placed.
• The 45-Day Myth: Management has claimed in interviews that centers can be set up in 45-50 days. In reality, the regulatory landscape—including the ART Act 2021, PNDT Act, and MTP Act—requires extensive approvals and site inspections that often take much longer. Any delay in setup will lead to cost overruns and further impact the already declining ROCE.

Cash Flow and Working Capital Strain

Gaudium IVF’s financial health is under pressure from two sides: high Capex needs and slowing cash collections.

• Negative Investing Cash Flows: The company has consistently seen negative cash flow from investing activities as it burns money on setup costs.
• Trade Receivable Spike: From less than INR 1 crore in FY 2023, trade receivables have jumped to nearly INR 51 crore in H1 FY 2026. The RHP attributes this surge to its flexible credit scheme whereby it collects only 20% of the cost from patients despite recognizing 75% of the total income up to the Embryo Creation stage while the rest is collected at the time of Embryo Transfer. No further details of the credit scheme are made available in the RHP.
• Dividend Payout Irony: In FY 2024, despite negative cash flows and a pending IPO, the company paid a dividend of INR 6.35 crore. Paying out dividends while simultaneously seeking public funds for expansion is often seen as a sign of aggressive capital management.

Legal & Regulatory Minefield

Beyond the tax cases, Gaudium IVF IPO red flags includes operational & legal risks:

• Medical Negligence: A pending civil litigation (Sarika Sakshi vs. Gaudium) involves allegations of “wrong and insufficient treatment,” with a demand for INR 52.71 lakhs. While the amount is small, the reputational risk in the fertility business is immense.
• The ART Act 2021: This new regulatory framework is a double-edged sword. While it may lead to market consolidation (helping organized players like Gaudium), the compliance burden and the risk of license suspension for minor procedural lapses have increased significantly.

Conclusion

Gaudium IVF is a company with a compelling narrative but a complex and risky reality. The “first-mover” advantage in the IVF space is real, but it comes at a high price for investors in this IPO.

Gaudium IVF IPO Red Flags: Three major concerns

1. Governance: The Income Tax survey findings regarding “unaccounted cash” from surrogacy are a serious red flag that cannot be ignored.
2. Quality of Growth: The shift toward Pharmacy revenue suggests the core IVF business is losing steam.
3. Execution Gap: Planning a 200% expansion (7 hubs to 26) without having identified premises or secured medical talent (amidst 63% attrition) is an uphill task.

At a P/E of ~25x, the market is not pricing in Gaudium IVF IPO risks. A “Governance Discount” should be applied. While high-risk takers might find the industry growth attractive, most conservative and long-term investors should wait for at least two to three quarters of post-listing performance to see if the company can stabilize its workforce and resolve its tax liabilities.

In short, Gaudium IVF IPO red flags clearly indicates that this is a high-stake gamble where the balance sheet risks currently outweigh the growth promise.