Nephrocare Health IPO Analyzed

Nephrocare Health Services, a company focused on dialysis services, is set to launch its shares on the stock market on December 17th. They raised a significant ₹871.39 crore through an initial public offering (IPO). Investor interest was very strong, with the offering being subscribed 14.08 times.

Key Points

• Nephrocare raised ₹871.39 crore in its IPO.
• The IPO was heavily subscribed – 14.08 times.
• Qualified Institutional Buyers (QIBs) showed strong interest (26.82x).
• Grey market trends predict a listing around ₹498.
• GMP indicates a 8.26% premium over the issue price.
• Funds will be used for new clinics and debt repayment.

The public offering closed on Friday, December 12th, and investors placed bids for 186.92 million shares, much more than the 13.27 million shares initially offered. The biggest interest came from investors who specifically targeted large institutional investments (QIBs), which subscribed 26.82 times, and non-institutional investors (NIIs) who subscribed at 24.77 times.

A smaller portion of investors, called retail investors, subscribed to 2.36 times. The decision of which investors get shares (the “basis of allotment”) was finalized on Monday, December 15th. Now, the company is waiting for the stock to officially be listed on the stock exchange.

Before the listing, information from the “grey market” – an unofficial market for shares – suggested that the stock would likely be listed at around ₹498. This means the shares would be worth more than the initial price of ₹460 per share. The “grey market premium” is the difference between this predicted price and the issue price, and it’s ₹38, or about 8.26 percent.

It’s important to remember that the grey market isn’t a reliable indicator. It’s just a guess based on limited information. The actual listing price could be higher or lower.

The IPO itself included two parts: a fresh issue of 7.7 million shares (worth ₹353.75 crore) and an “offer for sale” (OFS) of 11.3 million shares (worth ₹517.64 crore). These shares were being sold by the company’s existing owners.

Crucially, the company won’t receive any money from the OFS portion. Instead, the money will go to the original owners of the shares. The company also hired experts – KFin Technologies to manage the registration process, and ICICI Securities, IIFL Capital Services, Ambit, and Nomura Financial Advisory and Securities (India) – to help with the IPO.

The money raised from the fresh issue will be used for two main things: building new dialysis centers across India, and paying off some of the company’s debts. A small amount will also be used for general business expenses.

Companies use IPOs to raise money and grow their business.