Hospital chain Shalby falls on stock market debut
Photo Credit: Manni Das/VCCircle

Ahmedabad-based multi-specialty hospital chain Shalby Ltd made a weak start on the stock exchanges on Friday with its shares listing at a discount of roughly 4.5% to its issue price and ending weak in a volatile first session.

The stock closed the day at Rs 239.25 apiece, down 3.53% from the initial public offering (IPO) price of Rs 248, stock exchange data showed.

Shares of Shalby began trading on the BSE at Rs 237a piece. The stock touched a high of Rs 254.65 and a low of Rs 236.15 during the day.

After rising more than 1%, the benchmark BSE Sensex ended with 0.65% gains, reacting to exit polls that indicated a win for the Bharatiya Janata Party (BJP) in the assembly elections for Gujarat and Himachal Pradesh.

Shalby becomes the 33rd company to list on the bourses this calendar year. Of the previous 32 firms, 18 had risen on their listing days, stock-exchange data show.

The muted start to Shalby’s stock market journey follows an IPO that sailed through on the final day with the issue seeing demand from institutional and retail investors, but high net-worth individuals staying away.

Shalby now has a market capitalisation of Rs 2,584.13 crore. The company, which raised a little over Rs 500 crore ($78.2 million then) from the IPO, was seeking a valuation of Rs 2,679 crore.

Shalby is part of a growing number of healthcare companies that have opted to raise capital via an IPO in recent times.

Bangalore-based hospital chain Narayana Healthcare raised $95 million through a public offering in December 2015 while oncology chain HealthCare Global Enterprises Ltd went public in March 2016 with a $100-million IPO.

Aster DM Healthcare filed a draft proposal in July 2016 for a $300-million listing. It, however, postponed its IPO plans and refiled its fresh IPO documents with the Securities and Exchange Board of India (SEBI) in August with a reduced issue size.

Within the broader pharmaceutical and healthcare sector, Biocon Ltd’s contract research services arm Syngene International Ltd went public in July 2015. Alkem Laboratories Ltd, India’s fifth-largest drugmaker by domestic sales, tapped primary markets in December 2015 with a Rs 1,350-crore IPO followed by Warburg Pincus-backed Laurus Labs in November 2016.

Eris Lifesciences is the most recent pharmaceutical company to go public with a Rs 1,741 crore IPO in June this year.

Shalby’s public issue comprised a fresh issue of shares worth Rs 480 crore, besides a sale of shares worth Rs 24.8 crore by promoter Vikram I Shah.

The IPO saw a stake dilution of 18.84% stake on a post-issue basis. Based on the upper end of the price band, promoters’ holding fell fall to 79.4% after the IPO from 97.86%.

The promoters will get three years from the date of listing to meet the regulatory requirements of a minimum 25% public float for listed firms.

VCCircle had first reported in September 2016 that Shalby was eyeing an IPO and was in the process of hiring merchant bankers.

The firm had earlier explored raising capital via the private equity route, but then decided to list as it would allow it to raise more money.

Edelweiss Financial Services, IDFC Bank and IIFL Holdings managed the IPO.

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