Thyrocare IPO To Be Priced Between Rs 409 - Rs 446

The initial public offer of diagnostics services chain Thyrocare Technologies by which the promoter and one of its early investors will together dilute 20 per cent of equity will be opened on 27 April. Thyrocare, promoted by the scientist-turned-entrepreneur A Velumani in 1996, is currently one of the top 3 diagnostics chains in the country and valued at around Rs 2400 crore.

The company, which is entering the capital market after 20 years of its existence, is the second diagnostics laboratory in the country to come out with an IPO in the last five months, after the successful listing of Dr Lal PathLabs in December.

Thyrocare’s IPO may be priced between Rs 409 and Rs 446 a share, though a final decision is yet to be made on this, said a person familiar with the IPO process. The promoter and the investor—CX Partners, which is almost fully exiting from the company after 6 years, are looking for raising a total of Rs 480 crore through the offer. While the promoters Velumani and family plans to dilute 1 per cent of their stake, CX Partners will dilute 19 per cent of its equity in Thyrocare.

“We have finished the road shows and has got an assessment that there was a fairly good response, and the rest of the things have to be aligned successfully now,” said chairman A Velumani, talking about the IPO progress.

CX Partners, one of the five investors in the diagnostics chain, invested in the company in 2010, picking up the stake from promoters making a primary capital infusion. Post this, other four investors including Samara Capital, Norwest Venture Partners and ICICI Bank’s Emerging India Fund also invested in Thyrocare through primary and secondary deals.

The IPO proceeds will not come to the company as it mainly facilitates the exit for the investor.

“In fact, the company do not need cash at present as its cash flow has been quite comfortable and it has been maintaining at least Rs 80 crore cash balance in the books for the last several years,” added Velumani.

Thyrocare, which conduct some 192 tests and 54 profiles (medical diagnostic tests and profiles) at present focuses on early detection and management of diseases including thyroid disorders, growth disorders, metabolism disorders, auto-immunity, diabetes, anemia, cardiovascular disorders, infertility and various infectious diseases, has been revolutionary in many fronts in the industry.

With a unique strategy of a central laboratory concept and most economic operations based on volume, best of technology and logistics, Thyrocare almost disrupted the traditional models in the diagnostics market, especially in pricing. This ensured faster growth and better profitability to the company.

“In business, we have two options, that is either making money from the customer or make it from the vendor. While the ordinary people always thought about the first option, I could think about the second from the beginning and I proved it successful,” says the chairman.

The lab primarily operates its testing services through a fully-automated central processing laboratory located at Navi Mumbai. It had also recently expanded operations to include a network of regional processing labs. Thyrocare, through its wholly owned subsidiary—Nuclear Healthcare Ltd, has also started a network of molecular imaging centers in New Delhi, Navi Mumbai and Hyderabad, focused on early and effective cancer monitoring.

“We believe we have developed a platform of affordable diagnostic services and are in a position to further develop our services and enhance our test offerings.”

Thyrocare currently competes with key rivals SRL Diagnostics, Metropolis Healthcare 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.

With the growing healthcare spend and awareness among public and the rise in preventive care in particular, the diagnostics services has emerged one of the fastest growing segments in the country’s $75 billion healthcare market. Consultant PricewaterhouseCoopers had in a recent report projected that the diagnostic industry in India is expected to grow to $17 billion by 2021.