Alkem, Dr Lal PathLabs will have to come up with FPOs within a year of listing: Deepak Shenoy

In a chat with ET Now, Deepak Shenoy, Founder, Capital Mind, talks about the forthcoming initial public offerings (IPOs) by Alkem Labs and Dr Lal Pathlabs.

ET Now: A couple of primary issues have hit the Street. What are your views?
Deepak Shenoy: I used to be of the opinion that you cannot subscribe to an IPO. Once a famous investor said that if you like an IPO, you would not get any allocation and if you do not like it them you do not want any allocation.
IndiGo has probably changed things because if you liked it, you would have got allocation. So even now, there is some excitement in the IPO space. Both Alkem and Dr Lal PathLabs are very good companies, but perhaps valuations are looking a little expensive.

But in both the cases I am a little disappointed that the money is not really going to the company. Much of it is actually going to the existing shareholders. In all likelihood, both these companies are going to have secondary issues within a year because I do not think they are diluting the full 25 per cent required stake. They are going to sell more shares at a later date. So in that context, just speaking from a market perspective, promoters believe that the price will actually be higher a few months down the line. It would be the time when they they will have to dilute the remaining 10 per cent-odd that they will have to. So I believe from that perspective, it is worthwhile to consider investing in both these companies, even as they might be a little expensive for now. Having said that, a lot is going to be dependent on the market reaction on the day of listing.

So it is something that has to be taken with a lot of care. Both companies are great companies; they have reported fabulous profits so far, more so in case of Path than Alkem.