Thyrocare IPO subscribed 73 times, gets huge response on closing day

The initial public offering (IPO) of medical diagnostic chain Thyrocare Technologies generated huge demand, with the equity issue seeing 73 times more demand than the shares on offer.

According to data from stock exchanges, there were bids for 551 million shares, worth Rs 24,500 crore, against the 7.5 million on offer. The high net worth individual segment was subscribed 225 times, the qualified institutional buyers and retail quota were subscribed 73.2 and 8.2 times, respectively.

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The price range for the IPO was Rs 420-446 a share. At the top end of the band, the IPO was worth Rs 480 crore.

Dr Lal PathLabs, also a medical diagnostic company, had seen huge demand for its IPO in December 2015.  That IPO and then the listing performance had a good rub-off effect on Thyrocare, said Deven Choksey, managing director of the KR Choksey group.

The Thyrocare IPO was managed by JM Financial Institutional Securities, Edelweiss Financial Services and ICICI Securities.

In terms of sale, Thyrocare is the fourth-largest diagnostic chain in the country. The company conducts an array of medical diagnostic tests and profiles of tests that center 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 annually in recent years. It has margins of around 40 per cent, compared with Dr Lal and SRL’s 25-30 per cent margin. Analysts peg 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 7-8.5 times of the next two financial years.

In recent months, several health care entities, including  Alkem Laboratories, Dr Lal PathLabs and Narayana Hrudayalaya have come out with IPOs. Most of them have seen a good performance after listing.

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