Metropolis Healthcare closes 9% higher at Rs 960 from issue price of Rs 880

The public issue of the company was subscribed 5.84 times, as per subscription data available on exchanges.

Metropolis Healthcare ended at Rs 960, up 9 per cent against its issue price of Rs 880 per share, on the BSE on Monday.  The stock hit a high of Rs 981 and a low of Rs 935 in intra-day trade today.

On the National Stock Exchange (NSE),  too, Metropolis Healthcare ended at Rs 960, after hitting a high of Rs 983 in intra-day trade. It touched a low of Rs 935 on the NSE. A combined 7.89 million shares changed hands on the counter on the NSE and BSE, exchange data show.

The initial public offering (IPO) of Metropolis Healthcare, India's third-largest diagnostics service provider by revenue, had received good response from qualified institutional as well as retail investors.

The Rs 1,204-crore public issue was subscribed 5.84 times, as per subscription data available on exchanges. It received bids for 44.7 million equity shares against the IPO size of 7.66 million equity shares (excluding anchor investors' portion).

The reserved portion for qualified institutional investors has seen subscription of 8.88 times and non-institutional investors 3.03 times while retail investors part is subscribed 2.21 times, data shows.

The objects of the public issue are to achieve the benefits of listing the equity shares on the stock exchanges and for the offer for sale. The company does not receive any proceeds from the offer and all the proceeds received by the selling shareholders, in proportion to the offered shares sold by the respective selling shareholders as part of the offer.

In its prospectus, the company said it will continue to selectively evaluate opportunities to increase their shareholding in their subsidiaries and expansion opportunities in India, including through acquisitions of regional diagnostic healthcare service providers to grow in newer markets, increase its customer base, to strengthen or expand its technological capabilities; and enable it to achieve operating leverage by unlocking potential efficiency and synergy benefits.

At the higher end of the price band of Rs 880, the issue is priced at 40.2x its FY18 earnings and 37.3x its 9MFY19 earnings on annualised basis which appears fairly priced. Further, Metropolis Healthcare also has a better return ratio with return on net worth (RoNW) at 24.7 per cent for FY18 vs. 21.6 per cent for Dr Lal Pathlabs and 20.4 per cent for Thyrocare Technologies, brokerage firm Centrum Wealth Research said in an IPO note.

Given the vast geographical presence, diversified and large tests menu catering to several ailments, along with the ability to capture future opportunities by way of presence in key growth areas, is likely to help Metropolis Healthcare maintain its position and boost growth, it said.