Tuesday, December 1, 2015

IPO ANALYSIS: DR PATH LAB - GROSSLY OVER PRICED - AVOID


ISSUE DETAILS



ISSUE OPENS / CLOSES ON


08-12 / 10-12-2015
ISSUE SIZE
RS 630 CR
PRICE BAND
RS 540-550 ( discount of Rs 15 to retail investors)
FACE VALUE
RS 10

BUSINESS

DIAGNOSTIC CENTERS
PROMOTERS
ARVIND LAL
LISTINGS
BSE, NSE
BRLMs
CITIGROUP, KOTAK MAHINDRA CAPITAL
REGISTRAR

IPO GRADE
NA


Dr Lal PathLabs is the second largest diagnostic chain in India with 172 clinical laboratories, 1,554 patient service centers and over 7,059 pickup points as of September 30, 2015. Though the company has pan India presence, more than 72 per cent of its revenue comes from North India region.

India’s diagnostics industry is highly competitive with standalone centers having close to a 48 per cent market share, compared to around 37 per cent for hospital-based diagnostic centers.


DLP operates through “hub & spoke” model whereby specimens are collected across multiple locations within region for delivery to a predesigned clinical laboratory for centralised diagnostic testing, providing greater economies of scale and offers scalable platform for continued growth of business. The centralised IT platform fully integrates the large network through common logistics and payment system and tracks operations and internal performance metrics, thereby enabling to improve the efficiencies of business.

At the IPO price band of Rs 540-550, the stock is valued at 47 PE on FY15 EPS. The IPO has been grossly over priced. 

Even after considering the Rs 15 per share discount for retail investors, there might not be much gains on listing / in the short term. 

AVOID THE IPO.


2 comments:

  1. Hi Prasanna,

    Please advise whether we can apply or not

    ReplyDelete
  2. Dear sir u r have asked to avoid Dr lal IPO.but grey MKT is strong for Dr lal...currently shares are quated at 125/-rs....please give yr view

    ReplyDelete