Thyrocare Technologies IPO – What are the hidden factors in this IPO?
Thyrocare Technologies IPO Review
Mumbai based, Thyrocare Technologies IPO would open for subscription on 27thApril, 2016. Thyrocare Technologies Ltd has Pan India diagnostic chains. The company revenues grew at 23% CAGR in last 5 years. The company has made over 25% profits in the last couple of years. What are the positive factors in a Thyrocare Technologies IPO? What are the hidden factors about this IPO? Should you invest in this Thyrocare IPO or not? In this article, I would provide Thyrocare IPO Reviews
About Thyrocare Technologies Limited
Thyrocare Technologies Ltd Is one of the leading pan-India diagnostic chains and conduct 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, they 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. Company profiles of tests include 16 profiles of tests administered under our“Aarogyam” brand, which offers patients a suite of wellness and preventive health care tests.
Issue details of Thyrocare Technologies IPO
- IPO opens: 27-April-2016
- IPO closes: 29-April-2016
- Face Value: Rs 10 per share
- Issue price band: Rs 420 to Rs 446 per share
- Issue size: Rs 451 Crores
- Market lot:33 shares and in multiples of 33 shares therein
- Minimum investment: Rs 14,718 on lower price band
- Lead Managers: JM Financial institution, Edelweiss Capital and ICICI Securities
- Listing: BSE / NSE
- Download Thyrocare Technologies IPO Prospectus at this link
Purpose of Thyrocare Technologies IPO
1. Achieve the benefits of listing the Equity Shares on the BSE and the NSE and
2. Carry out the sale of up to 10,744,708 Equity Shares by the Selling Shareholders. The company would not receive any proceeds fro this OFS (Offer for sale).
3. General corporate purpose.
Company Financials (reinstated-standalone)
- The company generated revenue of Rs 81.2 Crores for the year ended Mar-11 and Rs 187.04 Crores for the year ended Mar-15. For 9 months ended Dec-15, it generated revenue of Rs 174.55 Crores.
- The company posted a profit of Rs 24.82 Crores for the year ended Mar-11 and profit of Rs 48.45 Crores for the year ended Mar-2015. For 9 months ended Dec-15, it generated a profit of Rs 43.58 Crores.
- Its restated EPS for FY 2015 is Rs 9.79and last 3 years average EPS Rs 9.9.
Reasons to invest Thyrocare Technologies IPO
- Revenues have grown from Rs 81.2 Crores FY11 to Rs 187.04 Crores in FY15 indicating a strong revenue growth of over 23% CAGR.
- Generated good margins of 25% to 29% in last 2 years and 9 months.
Reasons not to invest in a Thyrocare Technologies IPO
- There are various proceedings pending against the Company and its Directors, Subsidiary, Promoters and certain Group Companies, which, if determined against them, may have an adverse effect on its business.
- The company operates in a highly-competitive and fragmented industry, and its business, financial condition and results of operations may be adversely affected if we are not able to compete effectively.
- Company business depends on its reputation and customer perception of its brand, and any negative publicity or other harm to its brand may materially and adversely affect its business, financial condition and results of operations. Further, any actions taken by its authorized service providers may harm its business and brand.
- Company pathology testing services are performed at the CPL located in Navi Mumbai and at the RPLs located in New Delhi, Coimbatore, Hyderabad, Kolkata and Bhopal. Any disruption in the operations of any of its laboratories could reduce or restrict sales and materially and adversely affect its business, financial condition, cash flows and results of operations.
- Company business is dependent on particular tests for a large majority of its revenue, and any disruption to such tests could materially and adversely affect its business, financial condition and results of operations.
- The company depends substantially on its hub-and-spoke business model complemented by the RPLs. Any delay or interruption in the transportation of samples to the CPL or the RPLs could adversely impact the effectiveness of its business model.
- Other risk factors (Internal and external) can be viewed in the draft prospectus from Page no. 15 onwards.
Recommendation / Investment strategy – Thyrocare Technologies IPO
- On the upper price band of Rs 446 and on FY15 EPS of Rs 9.79, P/E ratio works out to 45.5x. Similarly, on last 3 years EPS of Rs 9.9, P/E Ratio works out to be 45x. Means company is asking issue price forOn the upper p
- P/E ratio between 45x to 45.5x.
- Its competitors, Dr. Lal Pathlab shares are trading at a P/E ratio of 87x. There are no other listed peers. Hence, difficult to determine with one peer comparison that whether the issue price is priced over priced or under priced.
- Company revenues grown at 23% CAGR in last 5 years. It is generating good margins in the last 5 years. However, margins are on the decline side in last 2 yrs 9 months compared to earlier periods. Issue price looks on higher side. While financial performance looks good, one should re-think whether to buy at current level or should wait for some correction once it gets listed. Personally, I would wait for some time before buying such stocks at such high price. We have seen many IPO’s earlier, which has come with high issue price, but now available at discounted price i.e. below issue price.
Disclaimer: I do not have an interest in investing in this IPO. The idea of giving positive and negative factors to investors in this article is to create awareness and education about this IPO. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such high risk investment options.
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Thyrocare Technologies IPO Review