In debut, Thyrocare healthier than others

Health care firm's listing outshines that of Alkem and Narayana Hrudayalaya

Diagnostic chain Thyrocare Technologies made an impressive debut on Monday, with the stock rising as high as 49 per cent intraday on the bourses.

On the BSE, the stock listed at Rs 662 against its offer price of Rs 446. It touched a high of Rs 665 before closing the day at Rs 618, up 38.6 per cent.

Thyrocare is the fourth health-care firm in the past six months to see its shares rise more than 30 per cent on listing day. Shares of Dr Lal PathLabs, Alkem Laboratories, and Narayana Hrudayalaya had gained 49.8, 31.6 per cent, and 34.7 per cent, respectively, on listing day. The only health-care firm which had made a dismal debut in the past six months is HealthCare Global Enterprises, whose shares fell 21 per cent on listing day.

Preventive health-care firm Thyrocare's Initial Public Offering (IPO) of shares had generated huge demand last week, with the issue subscribed over 52 times. The Qualified Institutional Buyers (QIB) portion was subscribed 76 times; the non-institutional bidders, or high networth individual (HNI, or the super-rich) portion was subscribed 225 times and the retail (small) quota was subscribed 8.4 times.

At the issue price of Rs 446 per a share, the IPO was worth Rs 480 crore. The Thyrocare IPO was managed by JM Financial Institutional Securities, Edelweiss Financial Services, and ICICI Securities.

Thyrocare is the fourth-largest diagnostic chain in the country. The company conducts an array of medical diagnostic tests and profiles of tests that centre on early detection and management of disorders and diseases. Through a subsidiary, the company also operates a network of molecular-imaging centres. Thyrocare has clocked revenue and operating profit growth of 20-25 per cent per year in recent times.

Analysts pegged the valuations at four to five times the enterprise value to sales for FY17 and FY18, lower than that of Dr Lal PathLabs, which is quoting at seven-8.5 times for the next two financial years. According to a recent research note by Centrum Wealth, Thyrocare is expected to command a premium valuation due to its strong brand image, proven track record, healthy financials, and presence in niche high-growth business.

Experts suggest investors in health-care IPOs are betting on an increase in demand for health-care services on the back of rising incomes in the country. Foreign investors have a strong appetite for the health-care space, because they see this as a multi-decade growth story, they said.