Market debutants continue bull ride

Narayana Hrudayalaya surges 36% on Day 1; 5th firm to list with hefty premium

Shares of private health care service provider Narayana Hrudayalaya listed at a premium of about 36 per cent over its issue price on the bourses on Wednesday, the fifth straight company to list with a hefty premium. The listing marks a period of renewed buoyancy for fresh share sales at a time when the secondary market is volatile.

Narayana Hrudayalaya opened at Rs 291 on the National Stock Exchange, 16 per cent higher than its issue price of Rs 250 a share. It touched an intra-day high of Rs 345.6 before closing at Rs 340.8, a gain of 36.3 per cent. The benchmark Nifty closed 0.5 per cent lower at 7,741.

Narayana’s strong debut follows stellar listings by drug maker Alkem Laboratories and diagnostic chain Dr Lal PathLabs last month. The firms had listed 31.6 per cent and 49.8 per cent over their issue price, respectively. In November, InterGlobal Aviation and SH Kelkar had debuted with listing gains of about 15 per cent each.

“Even in a volatile market, good quality companies with robust business models that are priced well will continue to attract investors,” said Satyen Shah, executive vice-president, Edelweiss Financial Services.

Narayana’s Rs 613-crore initial public offering (IPO) was subscribed 8.7 times on the bourses last month, with most of the demand coming from foreign institutional investors (FIIs). The qualified institutional buyers (QIBs) book was subscribed 24.4 times, the retail category 1.89 times and the non-institutional category, which includes investment from high net worth individuals, 3.6 times. The company had raised Rs 184 crore from 15 anchor investors, including the government of Singapore and a number of domestic mutual funds, at Rs 250, upper end of the price band.

“Investors are bullish on the health care space, especially hospitals, and Narayana Hrudayalaya has a unique business model and the backing of good quality management,” said Dharmesh Mehta, managing director and chief executive officer, Axis Capital.

According to experts, investors in health care IPOs are betting on a rise in demand due to rising incomes in the country. FIIs, in particular, are bullish on the sector and view it as a multi-decade growth story. Other health care firms such as Thyrocare Technologies, Healthcare Global Enterprises and Aster DM Healthcare plan to go public soon.

Despite a volatile secondary market, the IPO market saw a revival of sorts after four disappointing years, with 21 issues collectively raising Rs 13,600 crore, according to PRIME Database.

Seven IPOs received a mega response, with the issues getting subscribed anywhere between 14 times (Inox Wind) and 53 times (VRL Logistics). The largest was from InterGlobe Aviation for Rs 3,017 crore, while the average deal size was Rs 648 crore, according to PRIME. Year 2016 is expected to be a good one for the IPO market, especially in the second half. Twenty companies wanting to raise Rs 7,315 crore hold the requisite regulatory approval and another 11 wanting to raise Rs 5,445 crore are awaiting the nod.