The issue will close on April 5 (Friday).
So, should you subscribe to the issue? Here's what leading brokerages have to say on the company and the issue -
The diagnostics industry is projected to grow 1.3x to Rs 802.1 crore by FY20P from Rs 596.1 crore in FY18E, as per Frost & Sullivan analysis.
Besides, the company is well poised to leverage on the shifting trend from unorganised providers to organised providers in the diagnostics market. The overall growth in the Indian diagnostics market is expected to be led by eight major cities. Moreover, the company follows ‘hub and spoke’ model, which provides greater economies of scale. The company has implemented an asset-light model for a growing service network.
It has significantly expanded its service network by contracting with third-party patient service centres (PSCs), to service individual patients.
However, risk of implementation of pricing policies by the government, risk of technological advancement in diagnostics industry and high dependency on institutional customers are the key concerns to the company.
Centrum Wealth Research
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, MHL also has 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.
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 MHL maintain its position and boost growth. Hence, we suggest investors to “Subscribe for the long term” to this IPO.