Thyrocare Technologies Ltd made a spectacular debut on the stock markets on Monday with its shares listing at a 48% premium to the issue price, highlighting strong investor interest in the diagnostics segment.
Shares of India's largest thyroid testing firm opened at Rs 662 apiece on the Bombay Stock Exchange compared with the initial public offering of Rs 446 price. The shares traded between Rs 665 and Rs 606 and closed at Rs 618.10 apiece, giving the company a market value of Rs 3,320 crore ($500 million).
“Thyrocare’s listing shows the continued interest in the Indian healthcare delivery sector, which until recently was represented by multi-speciality hospitals,” said Prashant Jain, director of healthcare and life sciences at investment bank o3 Capital.
The blockbuster opening came after the IPO, which raised Rs 480 crore, was oversubscribed 72.26 times late last month.
Thyrocare joins rival Dr Lal PathLabs Ltd in making a strong debut. Dr Lal PathLabs IPO was oversubscribed 32 times and posted robust gains when it listed in December. Shares of Dr Lal PathLabs have risen 78% since the listing to Rs 979.25 apiece from the issue price of Rs 550, giving it a market cap of Rs 8,102 crore.
“Both Dr Lal PathLabs and Thyrocare have capitalized on the investor (institutional and retail) interest for low-capex, high-return (above 20%) and high-growth (above 20%) companies,” said Jain. “Their ability to hold up the listing gains will have a strong positive impact on new investments in the sector.”
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.
However, shares of oncology chain HealthCare Global Enterprises Ltd slumped on the listing day in March. 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.
Thyrocare’s issue was entirely an offer for sale by its promoters and private equity investor CX Partners. Thyrocare CEO A Velumani sold a 1 per cent stake while CX Partners, which held 21 per cent of the company, divested a 19 per cent stake via the IPO. Other investors Norwest Venture Partners, Emerging India Fund and Samara Capital retained 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 revenue of Rs 180.5 crore. For the full year 2014-15, it posted a net profit of Rs 44.4 crore on total revenue of Rs 190.3 crore.
JM Financial, Edelweiss Financial Services Ltd and ICICI Securities were the investment bankers for the issue.
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