Is Thyrocare (TTL) a Long-Term Stock?

[Full Disclosure: Thyrocare Technologies is a part of my equity portfolio]

So, this seasons hottest IPO has already gone live on the bourse and by now it has already seen 5 trading days, and has suffered some exchange of hands. The very moment its over subscription news appeared in the market, it was certain that it will be listed at an astronomical high. And it did. And some people exited after en-cashing this initial high. The chart below depicts how investors lapped up the opportunity to make a quick buck, moment after the bourse allowed its trading.

Thyrocare - Week 1

Having passed the initial stage, now the question remains is – Is Thyrocare Technologies a long-terms stock? Does this stock have the potential to multiply your invested money? Well, lets search for these answers based on some of the qualitative facts…

  1. Business Model Study – At the core, this is a medical diagnostic company which operates in a hub & spoke model. There are several collection centers and  centrally located labs which deliver the results (digitally), eliminating the need for the labs to be present everywhere. And essentially its a plug & play model, where the company can decide to expand to as many places as possible and hence create more customers overnight. {Company has several other interests in medical manufacturing, and other services as well.}
  2. Market demand – There is only one thing which remains constant about India’s medical needs – Its an under-served market. And its under-served to an unknown extent. And the quality of available options is so unreliable and poor that anything which comes with a quality assurance is bound to generate a demand.  {The major opportunity exists in those markets where the testing labs have been mostly unorganized and the prices are arbitrary.}
  3. Peer Group – The prominent names with similar business interests (excluding the pharma companies from this group) are only a handful, like Dr Lal Path Lab, SRL Diagnostics, etc. For a market as huge as this one, existence only a few organized players leaves a massive scope for future growth.
  4. Growth Opportunities – The below image illustrates the reach of Thyrocare across India. You can notice an opportunity which exists for the company on several states like Madhya Pradesh, Gujarat, etc. And these areas for physical expansion, along with technological improvements in the existing units is where there is a clear opportunity for growth.

Thyrocare - Authorised Service Providers

Some points for speculation

I am slightly surprised at both the bulk deals which happened on the listing day. These two trading houses, probably assumed that the prices would go high, but they soon realised the market sentiment, and hence didn’t waste their time being invested into it. But my bigger worry is not that they exited only a moments later, but they exited 100% with-in a few moments. Didn’t these guys have any hope that this stock would do any better in near-term? I think someone who better understands the psychology of these traders/brokers should help me understand this case.

Thyrocare - Bulk Deals

All in all, at this point of time, I believe this is a safe stock which has a potential to deliver some serious value enhancement in the years to come.

Data Sources:

[1] MoneyControl’s Data on ThyroCare Technologies Bulk Deals

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