The subscription for the South Indian diagnostics chain, Vijaya Diagnostic Centre was opened on September 1. This leaves potential investors wondering as to whether or not they should subscribe to the public issue. The issue that is worth Rs 1,895.40 crore will remain open for three days and after trading it will close on September 3. The basis of allotment for the company is set to be on September 8, while the IPO itself is set to list on the Stock Exchanges on September 14, 2021.
The Vijaya Diagnostic Centre IPO has an issue size of Rs 1,895 and is entirely an offer for sale (OFS) with the same value. The public issue has around 35,688,064 equity shares with a face value of Rs 1 per equity share. The price of the IPO stood at Rs 522 to Rs 531 per equity share and it is a book-built issue IPO. The company is looking to sell its shares and list on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
The grey market premium for the issue stood at Rs 20 per equity share as per information on IPO Watch. This indicated that the shares were trading at a premium of Rs 542 to Rs 551 on the unlisted grey market on day one of the issue.
The public issue had a lot size of 28 shares on the lower end with an application amount of Rs 14,868. On the higher end the lot size stood at 364 shares with a maximum application amount of Rs 193,284. The retail individual investors (RIIs) can apply for up to 13 lots at the upper limit of the lot size. Speaking of investor categories, the RIIs had an allocation of 35 per cent for their IPO reservation. The qualified institutional buyers (QIBs) on the other hand had the highest reservation which stood at 50 per cent. The non-institutional investors (NIIs) had a reservation of 15 per cent for the IPO. In the same line employees also enjoyed a discount of Rs 52 per equity share.
The company had also raised around Rs 566 crore from anchor investors ahead of its IPO. This came after the company had allocated around 1,066,141 equity shares to 29 anchor investors at Rs 531 per share, as per the circular uploaded on the BSE website.
Speaking on the position that Vijaya Diagnostic Centre hold in the industry, India Infoline Finance Limited (IIFL) Securities said in a note, “According to the CRISIL Report, the Indian diagnostics market was valued at Rs 710 billion to Rs 730 billion in the fiscal year 2021, and is projected to grow at CAGR of around 12% to 13% to reach Rs 920 billion to Rs 980 billion by fiscal year 2023 driven by rise in health awareness and disposable incomes, increase in demand for better healthcare facilities and quality of care of individuals, and increase in spending on preventive and wellness.”
The promoter for the issue was Dr S Surendranath Reddy, who is also the Chief Executive Officer (CEO) of the rapidly growing diagnostics chain. Vijaya Diagnostic Centre was established in 1981 and is considered one of the fastest-growing diagnostics chains in South India. The company offers a wide range of services in the areas of pathology and radiology, with around 740 routine tests, 870 specialized pathology tests, 220 basic tests, and 320 advanced radiology tests. It also has a robust network of 80 diagnostics centres and 11 reference labs that are present in 13 cities and towns in the states of Telangana, Andhra Pradesh, National Capital Region, and Kolkata.
“At the upper price band, Vijaya Diagnostic Centre Limited is demanding a PE multiple of 64.3X of FY21 earnings which is lower than the industry average of 90.8X. Considering the future growth potential of healthcare industry, revenue from operation, EBITDA and PAT growth of 13.5%, 23.9% and 35.5% CAGR during FY19 to FY21, respectively, strong ROE and ROCE of 23.64% and 42%, respectively in FY21, debt-free company with plans for acquisition and expansions, diversified service offerings and strong technical capabilities of the company, we recommend ‘Subscribe’ to the issue with a long-term perspective,” said IIFL Securities.
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