Thyrocare: Will It falter or come out as winner ?

aarogayamThyrocare Technologies shares touched a high of 669/- on 3/5/16(Friday)  and finally closed at  629.05. Today i.e. 06/06/16, the relatively newly listed company turned quite weak as it ran into two issues:

  1. The lock in period of shares allotted to anchor investors ended today
  2. Maharashtra Association of Resident Doctors (MARD) alleged that Thyrocare is encouraging cut practice amongst doctors.

Selling pressure on account of 1) may be only a temporary demand supply disequilibrium & can be expected to neutralise as time progresses. In response to a letter written by MARD to Maharashtra Medical Council to look into allegations of pay off to doctors, the company immediately came out against the allegation and denied any such practice. This may take some more time to get clear if there was any such malpractice or it is just a malafide allegation.

The course will perhaps be decided by another development as well. Thyrocare Technologies is holding a  meeting of the Board of Directors of the Company on  June 11, 2016, to declare financial results of the Company  and dividend if any.  The management had given a guidance that it can sustain margins at 40%. Based on simple extrapolation of its mid year figures, Revenues for year ending 2016 could be in region of  230 cr (180 cr) and Net  profit  at  53 cr(44 cr) which on an equity of approx  53 cr  results in EPS of 10/-. Dr. Lal Path Labs quotes at a PE of Approx 65+.

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