The secondary offering from Thyrocare Technologies which opened for subscription on Wednesday the 27th of April and closed on Friday the 29th of April received excellent support and was oversubscribed 39 times. The leveraged HNI subscribed his bucket size 138.70 times. And would still make money considering that the grey market premium is in the region of Rs 250. One wonders whether the present primary market is a nexus between the financers which are directly or indirectly an arm of merchant bankers and these leveraged investors who distort the demand and create such high subscription. One wonders whether SEBI has ever looked into this issue where a single individual from the HNI category where the bucket size is either 10% or 15% of the whole issue is permitted to subscribe to the whole issue. Secondly till today there hardly seems an instance where the spill over has happened from retail to HNI or QIB to HNI to warrant such subscription.

Thyrocare Technologies price band was Rs 420-446 and the issue was to raise Rs 479 crs at the top end of the band through a secondary offering. The detailed subscription in various categories is given below: –

Thyrocare Technologies Limited is tapping the capital markets with its secondary offering to sell 1,07,44,708 shares in a price band of Rs 420-446. The company had allotted 32,23,411 shares to 15 anchor investors comprising of 29 entities at Rs 446. The issue had opened on Wednesday the 27^th of April and closes today Friday 29^th April. The issue is already oversubscribed as of close of the second day on Thursday.

The company is a pan-India Thyrocare testing laboratory. It has India’s first and the world’s longest track automation system ensuring no human intervention in the vital testing space. The company has 5 regional processing labs in New Delhi, Coimbatore, Kolkata, Hyderabad and Bhopal with the central processing laboratory in Navi Mumbai. Currently the company is doing 40,000 samples per day for which it has a robust logistics system backed by IT infrastructure.

To increase the sustainability of the business significantly it has been moving from sickness related tests to wellness tests which could be compared with better health and health awareness. It follows a franchise model and a large part of the business comes from third parties. The company is essentially a B-B player. In its revenues it reports numbers on a net basis after providing payments to third parties and therefore the revenues are strictly not comparable with its competitors who provide for commissions in the profit and loss account.

When Thyrocare began operations it used disruption and gained market share. It used volumes to drive down costs significantly and therefore offered benefits to customers/patients by reduci9ng costs for testing by less than half.

Thyrocare reported revenues of Rs180 crs for the year ended March 2015 and Rs 170.9 crs for the nine months ended December 2015. EBITDA for the same period was 73.3 crs and 70.8 crs respectively while ebitda margin was a healthy 40.7% and 41.5%. Net profit was Rs 48.5 crs and Rs 43.6 crs.

Going forward the company has identified two thrust areas with the major on being water testing and launched services for them. The second is nuclear imaging used in the field of cancer and acquired an existing company. The operations of the nuclear company have broken even and look a good prospect going forward.

The concern of investors grows the business. In this company could be the returns on capital employed as they would be impacted in the short and medium term as the company add news regional labs and grows the business.

The issue would have generated a huge amount of fancy when subscription closes late in the evening today and one would not be surprised if the leveraged HNI applies for his bucket size a good 200 times. The retail portion is likely to be oversubscribed over 5 times in terms of number of applications.

SEBI Disclaimer: – I intend to subscribe for the minimum one lot in retail category.