Oncology chain HealthCare Global Enterprises Ltd (HCG) failed to enthuse investors on its stock-market debut on Wednesday as its shares slumped.
HCG's disappointing debut comes on the back of spectacular listings in the past year by a string of healthcare companies -- hospital chain Narayana Hrudayalaya Pvt Ltd, diagnostics chain Dr Lal PathLabs Ltd, drugmaker Alkem Laboratories Ltd, and Biocon arm Syngene International.
"HCG is just turning profit and has a history of losses, unlike Alkem and Dr Lal PathLabs. The company requires patience to unlock value, so that is probably the reason why investors were wary and didn’t participate,” said Sarabjit Kour Nangra, vice president at Angel Broking.
The company’s shares ended at Rs 170.95 apiece, down 21.6 per cent from its initial public offering price of Rs 218, after trading between Rs 169 and Rs 211 in a strong Mumbai market. The closing price gives it a market valuation of Rs 1,454.37 crore on the BSE.
Despite a poor showing, some analysts expect the company to do well in the long run as they are bullish on the sector.
“Oncology in India is amongst the fastest-growing markets within healthcare. It is growing at 15 per cent and we estimate it be a Rs 40,000 crore market by 2020,” said Rana Mehta, leader, healthcare at PwC India. “Oncology is capital intensive requiring specialised clinical skill set, thus requiring a longer gestation period for the facilities compared with multispecialty hospitals.”
The poor debut comes after the company’s IPO was oversubscribed 55 per cent. The issue had not found too many takers among retail investors and affluent individuals. This was the weakest response to an IPO of a healthcare firm in the past year.
Earlier, the company raised Rs 292.3 crore ($43.4 million) from a bunch of anchor investors, including International Finance Corp and private equity firm Sabre Partners. Among its existing investors, PremjiInvest, India Build Out Fund (now under Quadria Capital) and Temasek part-exited in the IPO.
The buzz around public floatation of healthcare companies will continue this year with India's largest thyroid testing company, Thyrocare Technologies Ltd, having recently received approval from the capital markets regulator Securities and Exchange Board of India for its IPO. Eye-care chain Centre For Sight is another healthcare company in the queue to launch an IPO.
HCG, founded in 1998, had 15 cancer centres, four free-standing diagnostic centres, one day-care chemotherapy centre, and 12 comprehensive cancer centres under various stages of development in the country as of June 30, 2015.