Alkem, Dr Lal soar over 30% on debut

Alkem intra-day high of Rs 1,413; Dr Lal Rs 843

Drug maker Alkem Laboratories and diagnostic chain operator Dr Lal PathLabs made a strong debut on the bourses on Wednesday. Shares of both opened over 30 per cent higher than their issue prices of Rs 1,050 (Alkem) and Rs 550 (PathLabs).

Alkem touched a high of Rs 1,413 intra-day and closed at Rs 1,381 on Wednesday, up 31.5 per cent from the previous close. Dr Lal PathLabs did better, touching a high of Rs 843, before closing at Rs 825, a gain of 50 per cent.

Alkem Laboratories and Dr Lal PathLabs had managed to mop up Rs 1,350 crore and Rs 632 crore, respectively, through their share sales, which closed on December 10. The issues were subscribed 44 times (Alkem) and 33 times (PathLabs).

“FIIs (foreign institutional investors) have a strong appetite for the health-care space, because they see this as a multi-decade growth story. The health-care assets listed on the exchanges are just about $3 billion and there is scope for more companies to come on board,” said V Jayasankar, senior executive director and head of equity capital market at Kotak Investment Banking.

Health-care Initial Public Offerings (IPOs) have seen robust demand from all investor segments, in contrast to recent marquee offerings of InterGlobe Aviation and Coffee Day Enterprises, which were given a miss by retail investors.

Alkem’s nine-million share offer was subscribed 57 times in the qualified institutional buyer (QIB) category, 130 times in the high net worth individual (HNI) segment, and nearly three times in the retail portion. Dr Lal’s 8.1-million share offer saw its QIB portion getting subscribed 63 times, the HNI segment 61 times, and retail nearly four times.

Citigroup Global Markets and Kotak Mahindra Capital managed Dr Lal's share sale. The Alkem IPO was managed by Nomura, Axis Capital, JP Morgan and Edelweiss Financial Services. Experts suggest investors in health-care IPOs are betting on an increase in demand for healthcare services on the back of rising incomes in the country.

On Monday, private health care service provider Narayana Hrudayalaya’s Rs 613-crore IPO was over-subscribed eight times on the bourses. The issue had seen strong demand from both institutional and high net worth individuals.

The BSE Healthcare index is up 15 per cent in the past year, compared with a six per cent fall in the 30-share Sensex.

Other healthcare firms such as Thyrocare Technologies, Healthcare Global Enterprises and Aster DM Healthcare also plan to go public soon.

Twenty-one firms have raised Rs 13,400 crore this year by way of share sales.