Vijaya Diagnostic Centre, the second diagnostic chain, opened its initial public offering on September 1 and closes on September 3. The price band for the public issue has been set at Rs 522-531 per equity share with a face value of Re 1 each.
Commenting on the IPO, Prashanth Tapse, VP Research, Mehta Equities said, "We believe Vijaya Diagnostic (VDCL) IPO gives investors an opportunity to invest in an integrated B2C diagnostic chain in India on multiple parameters. With competitive strengths like High B2C business model with hub and spoke network, Affordable One-Stop Solution with both radiology and pathology tests under one roof and well positioned to capitalize on healthcare spending across public and private sectors, will emerge as a strong alternative to healthcare demand after Pharma but the segment is also getting crowded post-pandemic and thus creating high competition going forward.
On valuations at upper price band (Rs 531), the issue is asking for a market cap of Rs 54.14 billion with annualized EPS for FY22 resulting PE of 41x, which seems the issue is fully priced in considering the near-term growth with higher than industry margins and ratios justifying premium valuations. On the other side this IPO issue is a pure secondary offer and OFS papers don’t attract more investor’s interest especially from the retail investors which has 35% issue allocation. Hence, based on all the rationale we advise investors to "SUBSCRIBE" the issue only with long term perspective."
Vijaya Diagnostic Centre (VDCL) is one among the fastest-growing integrated B2C diagnostic chains in Southern India. The company offers affordable one-stop solution for pathology and radiology testing services to customers through their extensive operational network, which consists of 80 diagnostic centres and 11 reference laboratories across 13 cities and towns in the states of Telangana, Andhra Pradesh, the National Capital Region and Kolkata as on June 30, 2021.
VDCL offers a comprehensive range of approximately 740 routine and 870 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines.
The issue comprises an offer for sale (OFS) shares by existing shareholders which includes Promoter, Dr. S. Surendranath Reddy, and marquee investors, Karakoram and Kedaara Capital Alternative Investment Fund - Kedaara Capital AIF 1 with a objective of exit to investors as well as achieve the benefits of share listing on the Stock Exchanges.
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