Investing in Thyrocare: A Strategic Move in the Indian Healthcare Sector
Thyrocare Technologies Limited, a leading diagnostic services provider in India, has remarkable potential for investors looking to make strategic moves in the rapidly growing healthcare sector. Founded in 1996 by Dr. A. Velumani, the company has come a long way since its humble beginnings in the Mumbai-based Bhabha Atomic Research Centre (BARC). Today, Thyrocare stands as the largest diagnostics provider in India, conducting over 110 million tests annually across a vast network of 3500 collection centers in more than 2000 towns.
The Diagnostics Market in India
The Indian diagnostics market is expected to hit INR 67,500 crores in 2020 and grow at a CAGR of around 10% until 2025, as per Edelweiss research. This growth is driven by a combination of factors, including increasing awareness about healthcare, a growing middle class, and government initiatives aimed at improving public health infrastructure. Throcare's strong performance in the market is attributed to its innovative business model, which includes partnering with local centers to serve as collection agents. This strategy has helped the company control costs more efficiently.
Recent Developments
In 2020, Thyrocare announced a significant development with its acquisition by PharmEasy. PharmEasy, a leading digital healthcare platform, acquired a controlling stake in the diagnostic chain for INR 4546 crore. This strategic move not only provides Thyrocare with the necessary tech to scale its business but also brings it into a robust healthcare ecosystem. The acquisition aligns with the growing trend of online healthcare adoption, especially in the wake of the pandemic, where tele-consultation, homecare services, e-pharmacy, and digital personal health management have seen heightened interest and adoption.
Comparative Analysis and Future Outlook
The acquisition by PharmEasy is a testament to the company's growth potential and the recognition of its capabilities within the industry. PharmEasy's user base of 12 million, network of 6000 digital consultation clinics, and 90000 partner retailers, combined with a mission to serve over 1 million patients across 100 cities, positions the company well for continued growth. Furthermore, with India’s online pharmacy market projected to reach 2.7 billion by 2023, the health tech sector is on a high growth path. The CAGR for the health tech market is expected to be around 39%, with the potential to touch 5 billion by 2023.
Conviction Behind the Investment
Making the decision to invest in Thyrocare was not purely based on past financial information or market share details. Thyrocare's stock price had already increased from INR 500 levels to INR 1400 levels without significant volatility, indicating steady growth. However, the future prospects and the strategic partnership with PharmEasy provided the real impetus. The significant investment by PharmEasy not only addresses the company's need for technology but also enhances its market penetration and service offerings.
The current valuation of Thyrocare, with NSE delivery rising to over 48 on June 28th, indicates high activity in the stock market. Key investors like Aditya Puri (founder of HDFC Bank), Nandan Nilekani, and large institutions such as Singapore's Temasek, CDPQ (Canada's second-largest pension fund), LGT, and B Capital (founded by Eduardo Saverin) have shown strong confidence in the company's future. The high-profile backing of these investors adds significant weight to the investment decision.
Further, the personal investment commitment by Thyrocare's founder, Dr. A. Velumani, of INR 1500 crore into the parent company, API Holdings, adds further assurance. This not only reflects his faith in the company's future but also aligns interests, ensuring sustainable growth.
Future Prospects and Conclusion
Like how e-commerce giants Flipkart and Amazon transformed the retail industry, health tech platforms like PharmEasy and 1mg hold immense potential to revolutionize the healthcare industry in India. With the acquisition, Thyrocare is no longer a standalone diagnostic center but a significant player in the health tech ecosystem. Investing in Thyrocare now, given its strategic alliances and future orientation, makes it a compelling choice for long-term growth.
The deal with PharmEasy ensures Thyrocare will benefit from the latest technology and operational efficiencies, making it well-positioned to scale up and meet the growing demand for accessible and high-quality healthcare services. A strategic and near-term outlook suggests that the downside risk from the current stock price level is limited, and the company's potential for growth is significant.
Thus, for investors looking to play a part in the exciting health tech sector, Thyrocare offers a compelling value proposition. With a blend of established performance, strategic alliances, and a clear vision for future growth, Thyrocare is a strategic investment in the rapidly evolving Indian healthcare landscape.