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Dr Lal Path Labs has fixed price band of its IPO in the range of INR540-550 per share and retail investors should be happy as the company has decided to offer a discount of INR15 per share to small investors. The initial public offering (IPO) will open on 8 December.
In its draft red herring prospectus (DRHP) filed with the regulator, the company said the IPO will involve sale of 11.6 million shares through an offer for sale (OFS). With the price band revealed, it is now clear that the IPO size will be INR6.3 billion at the upper price band. This confers a valuation of over INR45 billion to the Gurgaon based diagnostic and pathology laboratories chain. This is less than the INR60 billion the company was reportedly looking at the time of filing paperwork with the capital market regulator.
The company applied for the IPO on 14 September and received SEBI’s approval on 3 November, making it the second fastest approval this year after Coffee Day Enterprises Limited.
Read Also: SEBI clears Dr Lal Path Labs IPO
Since all the shares are sold by existing investors, the company will not receive any proceeds from the IPO. Among the prominent selling shareholders are Dr Arvind Lal (1.26 million shares) while Dr Vandana Lal plans to sell 2.06 million shares. Nevertheless, the biggest number of shares will come from Wagner Limited which aims to reduce its shareholding in the company by 5.86 million shares. Another 1.47 million shares will be offloaded by WCF (Westbridge Crossover Fund).
Strong financial performance
Dr Lal Path Labs IPO will be an interesting one as it is a well-known and respected brand. The company posted a profit of INR879.7 million in the fiscal ended 31 March 2015 on revenues of INR6.4 billion. Both figures were up from previous year, marking a growing demand of the company’s services. In recent years, PathLabs also acquired some of its competitors including Kolkata-based Medicave Medical Systems and Ahmedabad-based APL Institute of Clinical Laboratory & Research. We intend to explore Dr Lal Path Labs IPO in greater detail once the company files its red herring prospectus.