Dr Lal PathLabs initial public offer (IPO), which aims to raise up to Rs 638 crore, hit Dalal Street on Tuesday and will close on December 10 (Thursday).

Diagnostic chain Dr Lal PathLabs on Monday garnered over Rs 191 crore from anchor investors by selling shares at a price of Rs 550 apiece. The initial public offer (IPO), which aims to raise up to Rs 638 crore, hit Dalal Street on Tuesday and will close on December 10 (Thursday).

Price band for the offer has been fixed at Rs 540-550 per share and the allotment to anchor investors has been done at the higher end. Dr Lal PathLabs promoter and CMD Arvind Lal, Wagner Ltd, Westbridge Crossover Fund and Sanjeevini Investment Holdings Ltd, among others, will be selling stake in the IPO.

The company has strong business fundamentals, which are reflected in its financials. It has exhibited a strong 20.7 per cent CAGR on the sales front over FY2013-15, predominately led by volumes and partially on the back of pricing power. On the profitability front, the company has maintained healthy and steady margins in the range of 22-25 per cent.

At the end of September, the firm was operating 171 clinical laboratories and 1,554 patient service centres, besides having more than 7,000 pick-up points.

Market experts have mixed views on Dr Lal Pathlabs IPO. Here are key takeaways from 5 brokerage houses on the IPO:

ICICIdirect.com: Crisil expects healthcare delivery services to grow at 16-17 per cent CAGR in FY15-18. ICICIdirect.com believes Dr Lal Pathlabs, with its pan-India presence and reputation for providing quality diagnostic healthcare services, is well positioned to take advantage of the growth of the Indian diagnostic healthcare services industry. At the IPO price band of Rs 540-550, the stock is available at 46-47x on FY15 EPS of Rs 11.7. The brokerage house recommends ‘Subscribe’ to the issue.

Reliance Securities: Dr Lal Pathlabs franchise model is asset light on balance sheet, it is highly dependent on performance of franchisees and business partners. Further, while there has been an increase in evidence based treatments, lack of comprehensive and stringent framework exposes the vulnerability of large chains in this business. Though Reliance Securities like the fundamentals and remain confident of its immense business potential, the brokerage house suggest investing at lower levels.

Angel Broking: The company is valued at a P/E multiple of 43.5x-44.3x its FY2016E EPS at the lower and upper end of the price band respectively, assuming industry led growth. On P/BV basis, the company trades at 10.3x-10.5x FY2016E, which factors in a higher-than-industry growth and continuance of the current profitability of the business, which the company has been maintaining over the past few years. However, the company can sustain the profitability trend and is fundamentally strong, the valuations demanded through the IPO factor in the company’s business fundamentals as well as the scarcity premium with it being the only listed company in the space. Hence, we recommend an “Avoid” on the issue. Investors could consider waiting for a possible correction in the stock price post the listing of the IPO.

SMC: The company is mainly operational in north side with lower presence in rest of the country. It is into the business of consumer healthcare diagnosis and having established brand but no listed peers are available to compare with it. Therefore, it would enjoy the benefit of first listed sector and may attract investors for investment. The issue seems to be highly priced.

Sharekhan: The valuations appear stretched on absolute basis, the stock could command premium due to its strong brand image, extensive distribution and a proven track record in a niche and fast growing segment. Moreover, the valuations are at a discount to related (though not strictly comparative) hospital/healthcare companies (Apollo Hospitals at 25x EV/EBITDA and Fortis Healthcare at 58x EV/EBITDA) that have a relatively more capital intensive model. On the other hand, Dr Lal Pathlabs is a cash rich company with strong free cash flows and all its organic expansions can be funded through internal accruals.

(With agency inputs)

The BSE Sensex and NSE Nifty opened in red on Tuesday tracking weak global markets. Sensex opened 41.69 points down at 25488.42. Nifty opened 26.90 points down at 7,738.50.

10.55 am: Meanwhile, IPOs of Dr Lal Pathlabs and Alkem Laboratories hit market on Tuesday and will close on December 10 (Thursday). Alkem Laboratories has raised Rs 395 crore from anchor investors, including Abu Dhabi Investment Fund, by allotting shares at a price of Rs 1,050. Diagnostic chain Dr Lal PathLabs on Monday raised over Rs 191 crore from anchor investors by selling shares at a price of Rs 550 apiece.

10.39 am: Due to heavy rains and flooding in Chennai, both of Royal Enfield’s production facilities in Thiruvottiyur and Oragadam were shut since the 1 of December 2015. Eicher Motors in a release said, “We resumed production of motorcycles on December 7, 2015. However, due to a high rate of absenteeism by our employees, and issues with our local suppliers – we will be running at approximately 50 per cent capacity this week, and plan to be back up to 100 per cent capacity by next week.” The share price of Eicher Motors was trading 1.09 per cent up at Rs 16,405. The BSE Auto index was up 0.40 per cent at 18516.23. Sensex was down 70 points at 25,460. NSE Nifty was down 16 points at 7,749.40.

10.32 am: Brokers said sentiment took a hit on sustained foreign fund outflows and a weak trend in other Asian markets, tracking overnight losses in the US after oil sank to a seven-year low as OPEC decided not to slash output. Sensex was down 41 points at 25,489.

10.16 am:  Infosys on Monday said that it will expand its operations in Ireland and intends to create 250 new jobs over the next three years in the country. The share price of the IT major was trading 1.21 per cent up at Rs 1,058.95. Nifty50 index was down 9.20 points at 7756.20. Sensex was down 39.89 points at 25,490.

9.45 am: The rupee was trading lower by 10 paise at 66.83 against the dollar in early trade on sustained
foreign fund outflows amid increased demand for the US currency from importers.

9.32 am: ITC’s step-down subsidiary – Greenacre Holdings (GHL) has acquired 87.06 per cent of the equity share capital of Classic Infrastructure & Development (CIDL) at an aggregate consideration of Rs 11.38 crore. CIDL is an associate of Russell Credit (RCL). GHL is a wholly owned subsidiary of RCL, which a wholly owned subsidiary of ITC. CIDL having become a wholly owned subsidiary of GHL and of RCL and it has also become a wholly owned subsidiary of ITC with effect from December 07, 2015. The share price of ITC was trading 0.56 per cent up at Rs 315.30.

9.28 am: Future & Option (F&O) total turnover stood at 1,23,221.52 crore on December 07 and the total number of contracts traded on the day were 21,63,234. Of the total turnover, Index Futures contributed Rs 8,530.32 crore, Stock Futures Rs 18,008.97 crore and Index Options Rs 86,596.79 crore, while the contribution of the Stock Options was of Rs 10,085.43 crore. For the day, the total F&O PutCall ratio stood 0.68 while Index Options PutCall ratio was 0.70 and that of Stock Options was 0.52. The top five scrips with highest PCR on OI were UCO Bank (1.68), HCL Tech (1.24), Lupin (1.23), KSCL (1.23) and STAR (1.19).

9.16 am: Sensex was down 99 points at 25,431.22. Shares of oil producers will be in focus on Tuesday due to falling crude oil prices and OPEC decision against slashing high output levels. Reliance Industries, Cairn India and ONGC fell 1.25 per cent, 2.62 per cent and 1.54 per cent, respectively, on Monday. Cairn India was trading 2.10 per cent down at Rs 133.

9.15 am: The BSE Sensex and NSE Nifty opened in red on Tuesday tracking weak global markets. Sensex opened 41.69 points down at 25,488.42. Nifty opened 26.90 points down at 7,738.50.

Asian stock markets teetered near their weakest levels in three weeks on Tuesday, as a rout in oil prices to near seven-year lows knocked global energy company shares and commodity currencies. Hang Seng, Nikkei and Shanghai were down 1.89 per cent, 1.03 per cent and 1.43 per cent, respectively.

The plight of oil market hit energy shares on Wall Street hard. S&P 500 lost 0.7 per cent to 2,077.07, led by 3.7 per cent decline in the S&P energy sector energy index.

Global oil benchmark Brent crude futures dropped 5.4 per cent to $40.66 per barrel on Monday, after the Organization of the Petroleum Exporting Countries’ (OPEC) policy meeting on Friday ended without an agreement to lower production. Keeping production at near record levels in an oversupplied market has spooked investors grappling with reduced demand from China, the world’s biggest energy consumer.

Back home, the benchmark BSE Sensex on Monday slipped by 108 points to close at a three-week low of 25,530.114 led by a fall in ITC after a GST panel suggested 40 per cent tax rate for demerit goods like pan masala and tobacco. The index is on a downward spiral since Wednesday on sustained foreign fund outflows and has lost 639.30 points since.

(With agency inputs)

The BSE Sensex and NSE Nifty are likely to extend losses for the fifth trading session on Tuesday tracking SGX Nifty and weak global markets.(Express photo by Heena Khandelwal)

The BSE Sensex and NSE Nifty are likely to extend losses for the fifth trading session on Tuesday tracking SGX Nifty and weak global markets.

At 8.30 am, SGX Nifty was down 49.50 points, or 0.64 per cent, at 7,760.

Asian stock markets teetered near their weakest levels in three weeks on Tuesday, as a rout in oil prices to near seven-year lows knocked global energy company shares and commodity currencies. Hang Seng, Nikkei and Shanghai were down 1.89 per cent, 1.03 per cent and 1.43 per cent, respectively.

The plight of oil market hit energy shares on Wall Street hard. S&P 500 lost 0.7 per cent to 2,077.07, led by 3.7 per cent decline in the S&P energy sector energy index.

Global oil benchmark Brent crude futures dropped 5.4 per cent to $40.66 per barrel on Monday, after the Organization of the Petroleum Exporting Countries’ (OPEC) policy meeting on Friday ended without an agreement to lower production. Keeping production at near record levels in an oversupplied market has spooked investors grappling with reduced demand from China, the world’s biggest energy consumer.

Back home, falling for the fourth straight session, the benchmark BSE Sensex on Monday slipped by 108 points to close at a three-week low of 25,530.114 led by a fall in ITC after a GST panel suggested 40 per cent tax rate for demerit goods like pan masala and tobacco. The index is on a downward spiral since Wednesday on sustained foreign fund outflows and has lost 639.30 points since.

Shares of oil producers will remain in focus on Tuesday due to falling crude oil prices and OPEC decision against slashing high output levels. Reliance Industries, Cairn India and ONGC fell 1.25 per cent, 2.62 per cent and 1.54 per cent, respectively, on Monday.

(With agency inputs)

Dr Lal PathLabs has raised Rs 191 crore by allotting close to 35 lakh shares to anchor investors. The pre-initial public offering (IPO) placement was done at Rs 550 per share, which is the upper end of the issue price band. The offering will open for public subscription on Tuesday.

The company had allotted shares to 15 companies, including DB International Asia, Merrill Lynch Capital Markets Espana, Morgan Stanley Mauritius Company, SBI Magnum Multicap Fund and  T Rowe Price International Discovery Fund.

Dr Lal PathLabs has fixed the IPO price band of  Rs 540-550 per share. The company is also offering  a discount of  Rs 15 for retail investors.  The company plans to raise Rs 638 crore through the issue based on the upper price band.

Kotak Mahindra Capital and Citigroup Global Markets India are the book running lead managers for the issue.
Dr Lal PathLabs is a provider of diagnostics and related healthcare tests and services in India. The New Delhi-based company has a catalogue of 1,110 test panels, 1,934 pathology tests and 1,561 radiology and cardiology tests to undertake the entire gamut of routine and specialised tests. Customers include individual patients, companies and institutions, healthcare providers as well as hospital and clinical labs.

So far, 18 companies have raised close to Rs 11,000 crore from the primary markets during CY15, Prime Data showed. InterGlobe Aviation and SH Kelkar were the last two companies to hit the primary markets.