Thyrocare Technologies Ltd, a Mumbai-based diagnostic laboratory, is in talks with private equity players to raise up to Rs 240 crore. The company will use the funds to add hi-tech services such as scanning and imaging to its portfolio.
A Velumani, the promoter who holds 95% in Thyrocare, is willing to trade 40% of his stake for a sum of Rs 240 crore. That means he is seeking a valuation of Rs 600 crore for Thyrocare, which runs as a hub-and-spoke model with a single laboratory in Mumbai fed by 600 specimen collection centres.
“I will dilute up to 40% of Thyrocare stake to private equity players for around Rs 240 crore,” Dr A Velumani, CEO, Thyrocare Technologies told VCCircle. Thyrocare posted a turnover of Rs 52 crore in 2008-09 with EBIDTA of Rs 30 crore and net profit of Rs 20 crore. The company is planning to offer imaging services in over 20 cities and has earmarked an investment of Rs 10 crore in each city.
The valuation expectation appears to be a hurdle in Thyrocare’s PE-raising initiative. Three valuation experts, VCCircle spoke to, said, “it depends on a case-to-case basis. Typically, a valuation between 5 and 8 times of EBIDTA is justified.”
Velumani, who is not keen on diluting Thyrocare stake at lower valuations, is working on alternative models. “I might create a new vehicle and work on it, where equity will be shared with investors who are interested in this kind of business,” he says.
Started in 1996, Thyrocare’s central laboratory is connected to 30 air-connecting hubs in India, covering around 80-90% of the nearby population. The company has been growing at 30% YoY in terms of revenue. It plans to expand its collection centres from district heads to taluk heads and will open around 3,000 collection centres in the next few years. Times Private Treaties holds 5% stake in the company.