Thyrocare IPO oversubscribed 72 times; second-best public issue show in 8 years

Thyrocare Technologies Ltd's initial public offering (IPO) was oversubscribed 72.26 times on Friday after investors bid heavily on the third and final day of the share sale by India's largest thyroid testing firm.

This is the second best show for an IPO in eight years. In April 2015, goods and passenger transport services provider VRL Logistics Ltd's public float was oversubscribed over 73 times, beating Reliance Power's issue in February 2008. Reliance Power’s IPO, which saw bids worth Rs 7.5 lakh crore against the issue size of Rs 11,560 crore, was oversubscribed within a minute of opening. In January 2008,  the public float of Kishore Biyani-led Future group’s financial services arm Future Capital Holdings was subscribed over 132 times, setting an all-time record.

Non-institutional investors bid for 225.30 times of 1.61 million Thyrocare shares allotted for them. Retail investors, who had already covered the shares reserved for them on the first day itself, finally bid for 8.11 times of the 3.76 million shares set aside for them. Institutional buyers bid for 73.37 times of the 2.14 million shares reserved for them, stock-exchange data show.

Thyrocare's IPO was oversubscribed on the second day itself after being covered 55.13 per cent at the end of the first day of the issue.

On Tuesday, the company raised Rs 144 crore ($21.5 million) by allotting 3.22 million shares to a bunch of anchor investors including Sabre Partners.

Sabre Partners pitched in with around Rs 8 crore. The shares were allotted at the higher end of the price band of Rs 420-446 apiece.

Other anchor investors include funds under HDFC MF, Birla Sun Life MF, Fidelity, DSP Blackrock and Tata AIA Life Insurance.

The entire public issue was an offer for sale by the company's promoters and a private equity investor. The issue aimed to raise up to Rs 480 crore ($72 million).

Thyrocare CEO A Velumani offered to sell a 1 per cent stake while PE investor CX Partners, which holds 21 per cent of the company, offered to offload a 19 per cent stake via the IPO. Other investors Norwest Venture Partners, Emerging India Fund and Samara Capital retain their holding. Norwest and Samara hold 9.43 per cent and 2 per cent, respectively.

Thyrocare reported a net profit of Rs 40 crore for the nine months ended December 2015 on total revenues of Rs 180.5 crore. For the full year 2014-15, it posted a net profit of Rs 44.4 crore on total revenues of Rs 190.3 crore. 

JM Financial, Edelweiss Financial Services Ltd and ICICI Securities were the investment bankers for the issue.

The Indian IPO market rebounded strongly last year and a string of healthcare firms either launched, filed or got approval from the Securities and Exchange Board of India (SEBI) for public share sales.

Thyrocare’s rival Dr Lal PathLabs Ltd's IPO was oversubscribed 32 times at the end of the issue and the company made a spectacular stock market debut in December, underlining investor interest in the diagnostics segment.

Other healthcare companies including drugmaker Alkem Laboratories Ltd, hospital chain Narayana Hrudayalaya Pvt Ltd and Biocon Ltd's Syngene International Ltd contract research unit also made strong debuts on the stock exchanges. 

Earlier this month, however, oncology chain HealthCare Global Enterprises Ltd (HCG) saw its shares slump on the stock market debut. Analysts say HCG's shares could recover over a period as oncology is a capital-intensive sector requiring a longer gestation period for the facilities to turn a profit. 

Sabre Partners was also among the anchor investors in HCG’s IPO.

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