Subscribe to Thyrocare Technologies IPO: Ajcon global

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Thyrocare Technologies Ltd (“Thyrocare”) 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, Thyrocare 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. The profiles of tests include 16 profiles of tests administered under the “Aarogyam” brand, which offers patients a suite of wellness and preventive health care tests. Through their wholly owned subsidiary -Nueclear Healthcare Limited (“NHL”), they operate a network of molecular imaging centers in New Delhi, Navi Mumbai and Hyderabad, focused on early and effective cancer monitoring. Nuclear imaging consists of highly-specialised tests, such as PET_CT scans, which are used to provide high accuracy diagnosis of diseases such as cancer. Thyrocare Technologies offers advanced PET-CT scans through its subsidiary, NHL that owns and operates medical cyclotrons and PET-CT scanners. The company primarily operates their testing services through a fully-automated Central Processing Laboratory (“CPL”) which is located in Navi Mumbai and has recently expanded the operations to include a network of Regional Processing Laboratories (“RPLs”). Objects of the issue Thyrocare Technologies Ltd (TTL) is coming out with an initial public offering (IPO) to raise Rs451-479 crore from the equity market at a price band of Rs420-446 per equity share. Through the IPO, Tyrocare proposes to offer 10.7mn equity shares for sale by promoter and Investors. Promoter is offering up-to 0.5mn shares and investors are offering upto 10.2mn shares through offer for sale. Out of total shares for sale, 5.4mn are for QIB category (upto 3.2mn for anchor investor, 0.1mn to Mutual funds only and 2.1mn for all QIBs including mutual funds), not less than 1.6mn shares for Non-Institutional category and not less than 3.7mn for retail category. Since it is offer for sale, company will not receive any proceeds from sale of shares. 


Valuation At the upper end of the price band of Rs. 446, the IPO is valued at a P/E of 45x at annualised FY16 Post issue EPS of 9.9 which is cheap as compared to its immediate peer Dr. Lal Path Labs trading at a P/E of 84x. With due consideration to factors like a) portfolio of specialized tests with an emphasis on wellness and preventive healthcare, b) multi lab model - driving volume growth and economies of scale, c) pan-India collection network supported by logistics capabilities and information technology infrastructure, d) capital efficiencies in the diagnostic testing business, e) debt free Company, f) past strong financial performance, g) attractive ROE and ROCE in this kind of business model, h) offer price similar to its peer Company - Dr Lal Pathlabs IPO which expanded post listing; we recommend to “SUBSCRIBE” the issue.