The SRL Listing Is All Squeezed Out

The run-up in the stock implies all the exuberance is in the price

Merger and demergers continue to make headlines on Dalal Street. The latest being hospital chain Fortis Healthcare’s decision to separately list its diagnostic business run under its subsidiary SRL. Under the pretext of unlocking value for shareholders, promoters often opt for a separate listing when a particular sector has caught the fancy of investors.

In the largely unorganized $6 billion diagnostic market, SRL is the largest player with 7,200 collection points and a network of 325 labs followed by Dr Lal PathLabs, which has 5,000 collection points and 172 labs. Since its IPO in December 2015, Dr Lal has zoomed from its IPO price of Rs.550 a share to Rs.930, valuing it at 26x its estimated FY18 Ebitda.

If the same multiple is applied, the value of Fortis Healthcare'


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