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Should you invest in Thyrocare stock?
  • July 1, 2021
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Thyrocare was started in 1996, by Dr A. Velumani, a former scientist at Mumbai’s Bhabha Atomic Research Centre (BARC). Its first laboratory was set up in Mumbai, with an initial focus on thyroid testing. Today, it claims to be the country’s largest diagnostics provider by volume — with over 110 Mn tests performed annually. The diagnostics chain has a network of 3,500+ collection centres across more than 2,000 towns in India.

Since 2016, after it’s listing in stock exchange, Thyrocare has been growing steadily year after year.

Its share price increased from Rs.500 levels to Rs.1400 levels without much volatility.

 

An August 2020 Edelweiss research report says the Indian diagnostic market is estimated to have a size of $9 Bn (around INR 67,500 Cr), and would grow at a compounded annual growth rate (CAGR) of roughly 10% till 2025

Compared to its competitor, Thyrocare built better business model, instead of focusing on opening multiple diagnostic centres, it tied up with multiple local centres which acted as a collection agent for Thyrocare, this helped the company in controlling the cost to a greater extent. Thyrocare has been in the news recently due to PharmEasy’s acquisition, PharmEasy announced that it would buy a controlling stake in the diagnostic chain for Rs 4,546 crore.

The Thyrocare deal will allow PharmEasy to offer four key elements of healthcare — information, consult, test and treatment — at a time when online adoption is growing due to the pandemic.  The Tata Group acquired PharmEasy’s rival 1mg while Reliance Industries picked up a 60% stake in Netmeds in 2020. Last year, PharmEasy had also acquired smaller rival Medlife.

PharmEasy has a user base of 12 million, a network of 6,000 digital consultation clinics and 90,000 partner retailers across the country. It currently serves the pharmacy and diagnostic needs of more than 1 million patients. It aims to expand its network to over 200,000 such pharmacies servicing orders across 100 cities. India’s online pharmacy market is estimated to swell to $2.7 billion by 2023 from about $360 million in 2020.

With the deal from PharmEasy, Thyrocare is no more a simple diagnostic centre, Tech + Diagnostic will help Thyrocare to achieve phenomenal growth in the coming years. HealthTech is the new FinTech.

India currently has more than 5,000 health tech startups and the health tech market, is expected to grow at a CAGR of 39 percent to touch $5 billion by 2023. “Due to physical restrictions and safety concerns owing to the pandemic, there has been an increased adoption towards tele-consultation, homecare services, e-pharmacy, online fitness and digital personal health management which has catapulted the Indian health tech sector on a high growth path, The consumer adoption that health tech has been able to achieve in 2020 would have taken at least 4-5 years in a non-Covid 19 scenario.”

Enough explaining all the financial and market share details. I have made up my mind investing in Thyrocare not because of the above financial information. I bought the Thyrocare stock today around Rs.1300 levels based on the following observations

  1. What Thyrocare done in the past is not going to help any more in the future, after all stock price move based on what the company is going to do in the future, not based on what it has done in the past. PharmEasy will bring the much-needed tech to scale up the business of Thyrocare.
  2. Why should PharmEasy buy Thyrocare? Why not some other firms? When a company is investing Rs.4500+ crores into Thyrocare, obviously they would have done extensive research before making the deal. So we don’t need to worry much about the due diligence.
  3. The delivery % on NSE rose to more than 48% on June 28th which denotes a lot of activity happened over Thyrocare stock
  4. Who are the investors behind PharmEasy? Aditya Puri, the man behind the extraordinary growth of HDFC bank joined the board of PharmEasy. Nandan Nielkani is also one of the investor in PharmEasy. All these big names behind the PharmEasy would provide lot of conviction to
  5. Singapore’s Temasek, second-largest Canadian pension fund CDPQ & LGT. Facebook co-founder Eduardo Saverin’s B Capital, these are the three large institutions who backed PharmEasy
  6. Even after PharmEasy-Thyrocare deal, founder of Thyrocare Velumani agreed to invest Rs.1500 Crores of his own money into API holdings, a parent company of PharmEasy which proves his conviction towards the health tech start PharmEasy.

I have never tried ordering medicines online before, but I have tried to place order today with PharmEasy and compared that with 1mg and NetMeds, searching for respective tablets is much easier in PharmEasy and even the cost was comparatively much lesser in PharmEasy than the other two companies.

 

The open offer price was set at Rs.1300, earlier the stock was trading above Rs.1400 levels, after the open offer news, the stock price corrected and trading near Rs.1300 levels, so downside from here is limited. I went ahead and made my investment with Thyrocare today. Only two companies I have invested so far purely based on the potential of its future. One is Affle and second one is Thyrocare after PharmEasy acquisition. Rest all where market leaders bought them in March 2020 crash.

Just like how Flipkart, Amazon transitioned the ecommerce business, companies like PharmEasy, 1 mg has the potential to transform the health care industry in India. Finally, Thyrocare going into the hands of young entrepreneurs will only help the company to scale new heights in coming years.

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