By Rahul Arora, CNBC-TV18
Over the past few days, CNBC-TV18 has been telling you how the Wockhardt Hospital IPO has been on a sick bed. Tonight , it seems there is little left to breath life into it. Sources tell CNBC-TV18 that the company has pulled the plug on the issue.
This is just the thing that you do not want hear, if you are an investors Poor market conditions are being sighted as the reason for the IPO pullout, which has gone on for a period of eight days. That has left a very sour taste in the mouth of investors and that too from a high quality management. The reason cited doesn't hold much weight as other IPOs going through the same market conditions, like IRB, have been subscribed over four times.
We made the same point yesterday, when emar actually asked for an extension late Wednesday evening for its IPO. There are concerns on valuations and people are seeing that. If you take a look at the NSE website, all subscription applications are coming at the bottom end of the revised issue price. That is a telling statement in itself. Why has IRB gone through and why have these not gone through?
At present, Wockhardt is saying they are going to repay the money over 15-days. The issue has gone on for eight-days, add another 15-days and that is 23-days. Investors, who have put in their hard-earned money, have probably taken out the money from the secondary markets and put it into this IPO. They probably invested in the first couple of days and that money is going to come back to them in the next 14-15 days. If global markets hold out and equity markets rally, they have lost out on making money in other asset classes, perhaps even in other equities that they may have found appetizing enough for their own cause.
The subscription figures are 0.006 times HNIs, 0.06 times QIBs, 0.3 times retail, and overall 0.2 times. Eight days after an issue opened and that too with the management bandwidth that Wockhardt commands. It is going to be very hard because at the top end of the original price band, Wockhardt was talking about raising Rs 700 crore. The fact of the matter is, if that capital is needed, where is it going to come from now? With what face is the Wockhardt management going to approach investors after having pulled out of the issue? You will see their reactions no doubt in the listed Wockhardt stock itself, regardless of how the market reacts because this sort of news is not taken positively by the markets at all.
It was a point well taken that they wanted to revise their issue price but even if you compare it with Apollo Hospitals, it is going at about 24-25x one-year forward. Wockhardt Hospitals is going at 78-79x one-year forward. It is more expensive than what Fortis was, Fortis being in that same line of business has hardly made any money for its investors. So this is a telling statement. It would be very interesting to see what the next step is in terms of fund raising from Wockhardt but this is just the kind of thing that happened with Emaar yesterday and now it has happened with Wockhardt today and people are going to walk away very disappointed, especially investors who have put in their bids in the initial couple of days.
CNBC-TV18 Disclaimer: This information is source-based and has not been provided to the stock-exchanges.
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