Review By Dilip Davda on December 2, 2015
After a gap of five week’s calmness, primary market is once again gearing for some activities with a main board IPO from Dr Lal Pathlabs Ltd, which is coming out totally with its secondary offer for mobilization of around Rs. 625 crore. Details of the IPO are as under:
Dr Lal Pathlabs Ltd (LPL) has been in the business of consumer health since 1949 and has established its niche brand in the field of diagnosis services with over 20 % CAGR for past three years. LPL is a provider of diagnostic and related healthcare tests and services in India. Through its integrated, nationwide network, it offers patients and healthcare providers a broad range of diagnostic and related healthcare tests and services for use in core testing, patient diagnosis and the prevention, monitoring and treatment of disease and other health conditions. Its customers include individual patients, hospitals and other healthcare providers and corporate customers. In the Fiscal Year 2015, LPL collected and processed approximately 21.8 million samples from approximately 9.9 million patients.
According to management, it believes that the increasing prescription of diagnostic tests and services by healthcare providers in India, combined with the growing focus on early detection and prevention of chronic and lifestyle diseases, such as diabetes, hypertension, heart disease and cancer, creates a significant market opportunities.
Now to unlock the stakeholders value the company is coming out with a maiden IPO for listing purpose by way of secondary offer and has planned offer for sale of 11600000 equity share of Rs. 10 each by existing shareholders in a price band of Rs. 540-550 by way of book building route. Mini mum application is to be made for 20 shares and in multiples thereon, thereafter. IPO opens for subscription on 08.12.15 and will close on 10.12.15. Anchor bids will open on 07.12.15. The company is offering Rs. 15 special discount to retail investors as a gesture of goodwill. BRLM to this offer are Kotak Mahindra Capital Co. Ltd and Citigroup Global Markets India Pvt Ltd. Link Intime India Pvt Ltd is the registrar to this issue. Post allotment, shares will be listed on BSE/NSE. This offer constitutes 14.04% equity dilution of the post offer paid up equity.
On performance front, (on a consolidated basis) it has posted an average EPS of Rs. 14.62 (basic) and Rs. 10.12 (diluted) basis and return on net worth of around 31% for last three fiscals. For first half of current year it has reported net profit of Rs. 37.47 crore (after deducting special item of Rs. 16.63 crore) on a turnover of Rs. 407.71 crore. It has issued bonus shares in the ratio of 3 for 1 in September 2003 and 15 for 1 in September 2013. Last ESOPs done by the company during 2015 so far was at a price of Rs. 110.80 per share. If we annualized this and attribute on the existing equity capital of Rs. 82.65 crore (as no fresh equity is being issued), the asking price is at a P/E of 48 plus and at a P/BV of 8 plus makes it an expensive offer. Average cost of acquisition by the promoters is below Re. 1 per share.
As this is the first company under consumer healthcare diagnosis services sector having established brand and has no listed peers to compare with, it may enjoy the benefit of first mover of the sector and hence may attract fancy of investors. Although it being an expensive offer, moderate investment for short to medium term may be considered.
Review By Dilip Davda on December 2, 2015
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Dr.Lal PathLabs Ltd. offers an early investment opportunity in Dr.Lal PathLabs Ltd.. A stock market investor can buy Dr.Lal PathLabs IPO shares by applying in IPO before Dr.Lal PathLabs Ltd. shares get listed at the stock exchanges. An investor could invest in Dr.Lal PathLabs IPO for short term listing gain or a long term.
Read the Dr.Lal PathLabs IPO recommendations by the leading analyst and leading stock brokers.
Dr.Lal PathLabs IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Dr.Lal PathLabs IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Dr.Lal PathLabs IPO?"
Our recommendation for Dr.Lal PathLabs IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Dr.Lal PathLabs IPO.
The Dr.Lal PathLabs IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Dr.Lal PathLabs IPO allotment status to check.
