Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Event-Driven

In this insight, we analyze the details of Pharmeasy's acquisition of Thyrocare, rationale and boost to valuations, its impact on Thyrocare shares, and present a quick overview of India's pharma retail landscape.<a href="https://www.smartkarma.com/entities/pharmeasy" target="_blank" data-smartkarma-citation="entities:33473:1" rel="noopener">Pharmeasy (1416151D IN)</a>, India's leading e-pharmacy backed by established Private Equity players including Bessemer Ventures, Prosus (formerly Naspers), Temasek holdings, TPG, etc has boosted its valuation and expanded its business scope at one stroke with the acquisition of <a href="https://www.smartkarma.com/entities/thyrocare-technologies-ltd" target="_blank" data-smartkarma-citation="entities:22694:1" rel="noopener">Thyrocare Technologies (THYROCAR IN)</a>, a leading listed diagnostic chain in India. Pharmeasy is reportedly targeting to list its shares in India as soon as 2022. With COVID-led accelerated growth in demand for e-pharmacies and diagnostic/healthcare services, the sector has been in the limelight over the past year. Post this acquisition, Pharmeasy will be the only integrated health care tech play with a pan-India omnichannel presence spanning across the outpatient medical services spectrum. In our earlier report <a href="https://www.smartkarma.com/insights/reliance-amazon-onboard-online-pharma-retail-in-india-sector-now-set-for-explosive-growth" target="_blank" data-smartkarma-citation="insights:42377" rel="noopener">Reliance, Amazon Onboard Online Pharma Retail in India; Sector Now Set for Explosive Growth</a> we discussed in detail India's rapidly growing online pharma retail sector triggered by COVID-led restrictions. The sector has witnessed rapid consolidation and it is widely expected that two of its leading players could list their shares within a year.

In this insight, we analyze the details of Pharmeasy's acquisition of Thyrocare, rationale and boost to valuations, its impact on Thyrocare shares, and present a quick overview of India's pharma retail landscape.Pharmeasy (1416151D IN), India's leading e-pharmacy backed by established Private Equity players including Bessemer Ventures, Prosus (formerly Naspers), Temasek holdings, TPG, etc has boosted its valuation and expanded its business scope at one stroke with the acquisition of Thyrocare Technologies (THYROCAR IN), a leading listed diagnostic chain in India. Pharmeasy is reportedly targeting to list its shares in India as soon as 2022. With COVID-led accelerated growth in demand for e-pharmacies and diagnostic/healthcare services, the sector has been in the limelight over the past year. Post this acquisition, Pharmeasy will be the only integrated health care tech play with a pan-India omnichannel presence spanning across the outpatient medical services spectrum. In our earlier report Reliance, Amazon Onboard Online Pharma Retail in India; Sector Now Set for Explosive Growth we discussed in detail India's rapidly growing online pharma retail sector triggered by COVID-led restrictions. The sector has witnessed rapid consolidation and it is widely expected that two of its leading players could list their shares within a year.

Pharmeasy Acquires Thyrocare: Pre-IPO Move Boosts Valuation & Expands Operations

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/metropolis-health-services-limited" target="_blank" data-smartkarma-citation="entities:27829:1" rel="noopener">Metropolis Health Services Limited (METROHL IN)</a> is relatively a younger player in the Indian Diagnostics industry compared to competitors like <a href="https://www.smartkarma.com/entities/dr-lal-pathlabs-ltd" target="_blank" data-smartkarma-citation="entities:26927:1" rel="noopener">Dr Lal PathLabs Ltd (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/thyrocare-technologies-ltd" target="_blank" data-smartkarma-citation="entities:22694:1" rel="noopener">Thyrocare Technologies (THYROCAR IN)</a>, in terms of pan-India ambitions. However, despite its late entrance, Metropolis has scaled its business quite rapidly through strategic acquisitions and organic growth.
<h3>Insight Flow</h3>
<ul>
<li>Investment Thesis</li>
<li>Risks &amp; Mitigating Factors</li>
<li>Valuation</li>
<li>Conclusion</li>
</ul>

Metropolis Health Services Limited (METROHL IN) is relatively a younger player in the Indian Diagnostics industry compared to competitors like Dr Lal PathLabs Ltd (DLPL IN) and Thyrocare Technologies (THYROCAR IN), in terms of pan-India ambitions. However, despite its late entrance, Metropolis has scaled its business quite rapidly through strategic acquisitions and organic growth.
Insight Flow

Investment Thesis
Risks &amp; Mitigating Factors
Valuation
Conclusion


Metropolis Labs: A New Leader Is in the Making

Thyrocare Technologies / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/thyrocare-technologies-ltd" target="_blank" data-smartkarma-citation="entities:22694:1" rel="noopener">Thyrocare Technologies (THYROCAR IN)</a> has come a long way in the Indian diagnostics industry. In many ways, it has been a pioneer of the space especially in certain niches like the Wellness segment and in leveraging hub and spoke model with the pioneering of test samples logistics through air transportation.
In its around 25 years of existence, it has charted new paths. The first couple of decades saw strong growth. Over the past 5 years, the growth profile has been decelerating. The space has become increasingly competitive and listed players like <a href="https://www.smartkarma.com/entities/dr-lal-pathlabs-ltd" target="_blank" data-smartkarma-citation="entities:26927:1" rel="noopener">Dr Lal PathLabs Ltd (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/metropolis-health-services-limited" target="_blank" data-smartkarma-citation="entities:27829:1" rel="noopener">Metropolis Health Services Limited (METROHL IN)</a> have been expanding aggressively. Each player has been penetrating into each other's geographies and product niches, limiting differentiation among them.
Thyrocare seems to be adjusting its strategy in response to competition. It has been on an expansion spree in terms of its labs presence and exclusive franchisees. After being fixated on achieving scale with minimal centralized labs, Thyrocare seems to be shifting to a more broader and deeper distribution strategy. It seems to have realized that providing the best quality service may not be achievable with just a handful of centralized labs.
While this shift in strategy seems prudent and bulls would argue that Thyrocare is taking the next leap, the bears would argue that Thyrocare is late to the game and in its desperation to catch up to the competition, it may lose its USP of being the lowest cost producer. Should you be bullish or bearish on Thyrocare? Read on to find out.

Thyrocare Technologies (THYROCAR IN) has come a long way in the Indian diagnostics industry. In many ways, it has been a pioneer of the space especially in certain niches like the Wellness segment and in leveraging hub and spoke model with the pioneering of test samples logistics through air transportation.
In its around 25 years of existence, it has charted new paths. The first couple of decades saw strong growth. Over the past 5 years, the growth profile has been decelerating. The space has become increasingly competitive and listed players like Dr Lal PathLabs Ltd (DLPL IN) and Metropolis Health Services Limited (METROHL IN) have been expanding aggressively. Each player has been penetrating into each other's geographies and product niches, limiting differentiation among them.
Thyrocare seems to be adjusting its strategy in response to competition. It has been on an expansion spree in terms of its labs presence and exclusive franchisees. After being fixated on achieving scale with minimal centralized labs, Thyrocare seems to be shifting to a more broader and deeper distribution strategy. It seems to have realized that providing the best quality service may not be achievable with just a handful of centralized labs.
While this shift in strategy seems prudent and bulls would argue that Thyrocare is taking the next leap, the bears would argue that Thyrocare is late to the game and in its desperation to catch up to the competition, it may lose its USP of being the lowest cost producer. Should you be bullish or bearish on Thyrocare? Read on to find out.

Thyrocare: Taking the Next Leap or Late to the Game?

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Metropolis Healthcare / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27829" target="_blank" data-smartkarma-citation="entities:27829:1">Metropolis Health Services Limited (MHL IN)</a> raised US$175m in its IPO, making it the third listed diagnostics chain in India.
In my previous insights I've covered the company background, its projected growth and compared it to its main listed peers:
<ul>
<li><a href="https://www.smartkarma.com/insights/metropolis-healthcare-pre-ipo-quick-take-steady-performance-but-growth-lagged-network-expansion" target="_blank">Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion</a></li>
<li><a href="https://www.smartkarma.com/insights/metropolis-healthcare-ipo-fairly-valued-at-best" target="_blank">Metropolis Healthcare IPO - Fairly Valued, at Best</a></li>
</ul>
In this insight, I will re-visit some of the deal dynamics and provide a table with implied valuations.

Metropolis Health Services Limited (MHL IN) raised US$175m in its IPO, making it the third listed diagnostics chain in India.
In my previous insights I've covered the company background, its projected growth and compared it to its main listed peers:

Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion
Metropolis Healthcare IPO - Fairly Valued, at Best

In this insight, I will re-visit some of the deal dynamics and provide a table with implied valuations.

Metropolis Healthcare IPO Trading Update - Trading at Par with Dr Lal, Despite Its Smaller Size

<a href="https://www.smartkarma.com/entities/27829" target="_blank" data-smartkarma-citation="entities:27829:1">Metropolis Health Services Limited (MHL IN)</a> (MHL) plans to raise around US$175m in its Indian IPO via a sell down of shares by the promoter and private equity owners. MHL is one of the largest diagnostic chains in the country.
In my previous insight, <a href="https://www.smartkarma.com/insights/metropolis-healthcare-pre-ipo-quick-take-steady-performance-but-growth-lagged-network-expansion" target="_blank">Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion</a>, I analyzed MHL's recent financial performance and compared it with its listed peers, <a href="https://www.smartkarma.com/entities/26927" target="_blank" data-smartkarma-citation="entities:26927:1">Dr Lal Pathlabs (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/22694" target="_blank" data-smartkarma-citation="entities:22694:1">Thyrocare Technologies (THYROCAR IN)</a>.
In this insight, I'll run the deal through our IPO framework and comment on valuation.

Metropolis Health Services Limited (MHL IN) (MHL) plans to raise around US$175m in its Indian IPO via a sell down of shares by the promoter and private equity owners. MHL is one of the largest diagnostic chains in the country.
In my previous insight, Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion, I analyzed MHL's recent financial performance and compared it with its listed peers, Dr Lal Pathlabs (DLPL IN) and Thyrocare Technologies (THYROCAR IN).
In this insight, I'll run the deal through our IPO framework and comment on valuation.

Metropolis Healthcare IPO - Fairly Valued, at Best

India

Thyrocare Technologies Ltd. is a leading diagnostic healthcare service provider in India, specializing in pathology and radiology services. The company operates one of the largest networks of diagnostic laboratories, focusing on clinical chemistry and preventive care through its Aarogyam brand. It also offers imaging services through its subsidiary, Nueclear Healthcare Limited, and has expanded its international presence to Tanzania. The company is headquartered in Navi Mumbai, Maharashtra, India, and was founded in 1996. 

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Thyrocare Technologies (THYROCAR IN)

Pharmeasy Acquires Thyrocare: Pre-IPO Move Boosts Valuation & Expands Operations

Analysis of acquisition rationale, valuation upside for Pharmeasy, and share outlook for Thyrocare based on the open offer. Overview of India...

Devi Subhakesan

Metropolis Labs: A New Leader Is in the Making

Metropolis has got its strategy right by focusing on quality and brand. It is also showing healthy growth aggression. With time, we would not be...

Ankit Agrawal, CFA

Thyrocare: Taking the Next Leap or Late to the Game?

Thyrocare seems to be following competition and shifting its strategy towards more decentralization vs its original strategy of heavy...

Ankit Agrawal, CFA

Metropolis Healthcare IPO Trading Update - Trading at Par with Dr Lal, Despite Its Smaller Size

Metropolis Health Services Limited (MHL IN) raised US$175m in its IPO, making it the third listed diagnostics chain in India. In my previous...

Sumeet Singh

Metropolis Healthcare IPO - Fairly Valued, at Best

Metropolis Health Services Limited (MHL IN) (MHL) plans to raise around US$175m in its Indian IPO via a sell down of shares by the promoter and...

Sumeet Singh

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