Vijaya Diagnostic Centre was incorporated in 2002, and is the largest integrated
diagnostic chain in southern India. Vijaya Diagnostic provides integrated services
of pathology and radiology and offers around 740 routine tests, 870 specialized
pathology tests, 220 basic tests, and 320 advanced radiology tests. Vijaya
diagnostic network consists of 80 diagnostic centers and 11 reference labs across
13 cities. Companies 81% of revenue comes from Hyderabad.
Positives
(a) The fastest growing diagnostic chain with a dominant position in
south India. Between 2017 and 2020 the volume of tests has grown by 15%,
while the volume of patients has grown by 14%.
(b) The company provides
integrated diagnostic pathology & radiology services under one roof.
(c) The
company has a very high brand recall in its core market of Hyderabad and
derives 92% of its revenues from its high margin B2C business.
Investment concerns:
(a) The company has very high concentration towards one
city with Hyderabad accounting for 81% of the revenues. Increase in competition
in the main market can impact growth as well as EBITDA margins.
(b) In FY2021,
the company had got some benefits due to increase in COVID related tests, which
is not expected to continue in the future and can have an adverse impact on the
volume.
(c) Low promoter holding will also be an issue for the company as post
IPO the promoters’ holding will go down to 32.7%.
Outlook & Valuation: Based on FY2021 numbers, the IPO is priced at a Price to
Earnings of 64.3 times and EV/EBITDA of 30 times at the upper price band of the
IPO, which is in line with the listed peer group. The company already has a higher
market share in key geographies like Hyderabad and we do not expect COVID
related benefits to continue in the coming years. We believe that at ₹531, all the
near term positives are priced in which leaves limited upside for the investors.
Hence, we are assigning a “NEUTRAL” recommendation to the Vijaya Diagnostic
centre limited IPO.
Vijaya Diagnostic IPO Details
|
IPO Opening Date |
Sep 1, 2021 |
|
IPO Closing Date |
Sep 3, 2021 |
|
Issue Type |
Book Built Issue
IPO |
|
Face Value |
₹1 per equity
share |
|
IPO Price |
₹522 to ₹531 per
equity share |
|
Market Lot |
28 Shares |
|
Min Order
Quantity |
28 Shares |
|
Listing At |
BSE, NSE |
|
Issue Size |
35,688,064 Eq
Shares of ₹1 |
|
Offer for Sale |
35,688,064 Eq
Shares of ₹1 |
Vijaya Diagnostic IPO Tentative Timetable
|
IPO Open Date |
Sep 1, 2021 |
|
IPO Close Date |
Sep 3, 2021 |
|
Basis of
Allotment Date |
Sep 8, 2021 |
|
Initiation of
Refunds |
Sep 9, 2021 |
|
Credit of Shares
to Demat Account |
Sep 13, 2021 |
|
IPO Listing Date |
Sep 14, 2021 |
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