Issue Price : Rs 420 – Rs 446Issue Date : 27th April – 29th April 2007 Lead Managers : JM Financial, Edelweiss Financial, ICICI Securities About the Company Business : Thyrocare is a 16 year old company. Thyrocare is a leading pan India diagnostic chain and conducts an array of medical diagnostic tests and profiles
Promoters & Venture Funds : Promoted by Dr. Velumani, foreign investors in co. are CX Partners-21% stake , Norwest Venture Partners (NVP)- 9.4% stake and Samara Capitall-2% stake. Only CX partners which holds 1.02 crore shares with approx acquisition price of Rs. 111/- . ICICI Bank’s Emerging India Fund also invested in Thyrocare through primary and secondary deals. Out of the three, only CX Partners will be participating in Thyrocare IPO and plans to sell 1.02 crore shares through Agalia investment. The shares are also sold by the company’s existing shareholders including A Velumani HUF and Anand Velumani. CX Partners holds 21% stake or 1.12 crore shares in Thyrocare with average cost of acquisition of INR 110.67 per share. NVP and Samara Capital own 9.4% and 2% equity stake respectively but will not be participating in the IPO. As stated by its promoter the co. does not need cash as it has been maintaining about Rs 80 crore cash balance in the books for the last several years.Financials : Revenues for year ending 2016 projected at 230 cr (180 cr) and Net profit at 53 cr(44 cr) which on an equity of approx 53 cr results in EPS of 10/- . the other recent IPO, Dr. Lal PathLabs turned in much improved performance after IPO and now as 12 m TTM EPS at 14.5 which at current price of Rs. 1000/- translates to 75 PE. Assessment Market, Prospects & Comparison: Other key players in Rs. 400 billion diagnostic service are SRL Diagnostics, Metropolis Healthcare, Apollo and Dr Lal PathLabs in the organised sector in the Rs 40,000 crore worth Indian diagnostics services market, which is growing at about 15 per cent annually. As per consultant (PwC), The diagnostics market is the fastest growing segment of India’s healthcare industry, with the segment forecasted to grow to $17 billion, or about 1,05,400 crore by 2021. Plus Points : This is second issue form a well established company in diagnostic sector. The first issue Dr. Lal Pathology saw strong debut & has been steadily garnering investor interest. Risks : Margins may be affected by increasing competition. Overall Assessment :
- Based on projected figures Thyrocare can clock EPS of 10/-. PE at offer price would be 45-50. Lal Path had come at slightly higher PE (>50) . Later came with bumper results & its PE based on EPS-TTM stands at 70 . Lal Path is a bigger player 3-4 times the co.
- Thyrocare has been a steady performer. Net profit margins are slightly under pressure due to market forces but have been made good by increasing revenue.
- PWC has projected high growth for diagnostics industry
- There is likely to be shift towards organised players in diagnostic industry