The smooth ride of healthcare stocks might have come to a halt with the listing of Bengaluru-based HealthCare Global Enterprises (HCG), an oncology chain that received a cold shoulder from the markets on its listing day.
The stock listed much below its issue price as market sentiment and an oversupply of IPOs in the space might have taken the sheen off, say industry analysts.
HCG opened at Rs 210, which is the lower end of the issue’s price band of Rs 208-218, however, towards the end of the day, it tanked 19% to close at Rs 171 on the BSE despite a strong broader market.
“The market sentiment towards pharma and healthcare stock is bad right now,” said Daljit Singh, head of research at brokerage firm India Nivesh. “Also, there is an oversupply of healthcare IPOs.”
HCG, which operates the largest chain of oncology hospitals in India, has marque investors like Premji Investments and Temasek, among others. The company has raised Rs 650 crore through the IPO.
A part of the sum would be used to pay the company’s debt. The issue was oversubscribed by 1.6x. Lack of interest from investors for HCG is surprising as its peers which were listed few months ago had received a thumping response.
Narayana Hrudayalaya, which operates in a similar business as HCG had jumped over 30% on the day of its listing in January. One of the investment bankers that advised HCG said that they might have got the timing wrong.
“It is yearend, so different funds would have had different priorities, but once the market sees the quarterly earnings, the stock will pick up,” said the head of an investment bank who did not wish to be named.
Date: 31st March, 2016.