Indian primary market promises to be full of action in coming months with several Initial Public Offerings (IPOs) slated to hit markets due to improving market sentiment leading to investors coming out of their shell and buying quality offerings.
Taking cues from Dr. Lal Pathlabs Ltd., and Thyrocare Technologies Ltd., Metropolis Healthcare Ltd., one of the largest diagnostic chains in India, plans to sell shares in an IPO to raise about Rs 1,000 crore, according to media reports. The IPO will target those investors seeking to invest in healthcare sector. Investors find healthcare sector attractive as there is shortage of healthcare infrastructure in India.
Recently Dr. Lal Pathlabs and Thyrocare Technologies Ltd., listed successfully on bourses which saw robust investor demand for the public issue of shares. Dr. Lal Pathlabs and SRL Diagnostics are Metropolis’ two biggest competitors. The IPO, as has been the trend recently, will provide an exit opportunity to early investor Carlyle Group.
Metropolis, through its 20,000 laboratories, hospitals and nursing homes conducts over 30 million medical tests a year. The company boosts of 130 laboratories in India and six other emerging markets with 750 collection centres.
Metropolis’ IPO will be bench-marked to the Dr. Lal Pathlab and Thyrocare’s performance. Dr. Lal Pathlab and Thyrocare have given approximately 54 per cent and 27 per cent respectively since its IPO. The market opportunity is huge for diagnostics businesses with larger cities witnessing a increasing awareness level leading to higher spending on preventive healthcare. Another aspect aiding the business growth is the increasing health insurance penetration that encourages higher spending on healthcare.
The fragmented diagnostic domestic market is estimated at Rs 37,700 crore per year. The growth rate for the industry is estimated at 16-17 per cent as per Crisil Ltd.