Thyrocare Technologies IPO review (Apply)

Thyrocare Technologies Ltd (TTL) is one of the leading pan-India diagnostic chains and conducts an array of medical diagnostic tests and profiles of tests that center on early detection and management of disorders and diseases. As of February 29, 2016, TTL offered 198 tests and 59 profiles of tests to detect a number of disorders, including thyroid disorders, growth disorders, metabolism disorders, auto-immunity, diabetes, anemia, cardiovascular disorders, infertility and various infectious diseases.

Its profiles of tests include 16 profiles of tests administered under “Aarogyam” brand, which offers patients a suite of wellness and preventive health care tests. The company primarily operates its testing services through a fully-automated CPL and has recently expanded its operations to include a network of RPLs. Since the opening of company’s RPLs in 2015, it has seen an increase in the volume of tests that it has conducted from a daily average of approximately 95,610 in Fiscal 2014 to approximately 131,073 in Fiscal 2015 and approximately 159,350 in the nine months ended December 31, 2015. Through its wholly owned subsidiary, NHL, TTL operates a network of molecular imaging centers in New Delhi, Navi Mumbai and Hyderabad, focused on early and effective cancer monitoring.

To further grow its business and volumes of samples processed by it, the company intends to expand its network of RPLs to a greater number of cities across India.  The company plans on targeted expansion of its network by continuing to establish RPLs in locations with close proximity to rail or road networks and in markets that are expected to generate high volumes of samples.

In recent years, TTL’s focus has been on the development of a wide range of tests and profiles in the fast growing segment of wellness and preventive healthcare.

Since the opening of the RPLs in 2015, the company has seen an increase in the volume of samples processed. It’s laboratories processed approximately 12% more samples in Fiscal 2014 compared with Fiscal 2013. With the opening of the RPLs, it processed approximately 30% more samples in Fiscal 2015 compared with Fiscal 2014. Thus it believes the higher rate of volume growth in Fiscal 2015 was partly on account of our RPL network.

For giving exit option to its existing stakeholders, the company is coming out with a maiden IPO purely with secondary offer (i.e.  Offer for sale). TTL is offering 10744708 equity share of Rs. 10 each via book building route and has fixed a price band of Rs. 420-446. Thus it plans to mobilize Rs.  451.28 cr./Rs. 479.21 cr. based on lower and upper price bands. Issue opens for subscription on 27.04.16 and will close on 29.04.16. Minimum application is to be made for 33 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE.  BRLM’s to the issue are JM Financial Institutional Securities Ltd., Edelweiss Financial Services Ltd and ICICI Securities Ltd. Link Intime India Pvt Ltd is the registrar to the issue. As the offer is secondary, paid up equity post IPO remains the same.

On performance front, it has posted net profit of Rs. 44.43 crore on a turnover of Rs. 190.34 crore for FY 15 on a consolidated basis. For first nine months of the current fiscal it has posted net profit of Rs. 40.02 crore on a turnover of Rs. 180.47 crore. If we attribute latest earnings on annualized basis on the current paid up equity capital of Rs. 53.72 crore, then the asking price is at a P/E of around 45. That compares well with its peer that recently went public and quotes at a P/E of 85 plus.

The company has issued three bonuses in the span of 16 years so far in the ratio of 1 for 1 in November 2003, 5 for 2 in March 2006 and 3 for 1 in September 2014. Between 2003-2006 it issued shares at a price of Rs. 200 per share. It also issued few shares in March 2013 at a price of Rs. 75 per share.

The merchant bankers have mixed trends for their past mandates.