Vijaya Diagnostics IPO: All You Need To Know
The diagnostic chain will sell shares at Rs 522-531 during its three-day initial public offering starting Sept. 1.
Vijaya Diagnostic Centre Ltd. will sell shares at Rs 522-531 apiece during its three-day initial public offering starting Sept. 1 as it seeks to provide existing shareholders an option to sell stake in a boom year for Indian firms looking to go public.
The Telangana and Andhra Pradesh-based integrated diagnostic service provider is seeking a market value of Rs 5,414.4 crore at the upper end of the price band.
The IPO is an offer-for-sale of up to 35.7 lakh equity shares, or up to 35% of its total shareholding. Private equity investors Karakoram Ltd. and Kedaara Capital will sell 30% and promoter shareholder Dr. S Surendranath Reddy is offering 5%. Following the initial share sale, private investor stake will stand at 10%.
Issue opens on: Sept. 1.
Issue closes on: Sept. 3.
Total issue size: Offer for sale of Rs 1,895 crore.
Face value: Re 1 per share.
Bid lot: 28 equity shares or its multiples thereafter.
Listing on: BSE and NSE.
Book running lead managers: ICICI Securities Ltd., Edelweiss Financial Services Ltd. and Kotak Mahindra Capital Co.
Objective
This is an offer for sale, allowing existing shareholders to sell stake. The company won't receive any proceeds.
Business
Vijaya Diagnostic Centre is the largest integrated diagnostic chain in southern India by operating revenue and one of the fastest-growing diagnostic chains by revenue for fiscal year 2020, according to a Crisil report.
Founded in 1981, it offers pathology and radiology testing services to customers through its network of 81 diagnostic centres and 11 reference labs across 13 cities and towns in Telangana and Andhra Pradesh and in the National Capital Region and Kolkata as on June 30, 2021.
For the three months ended June and FY21, the diagnostic chain derived 95.9% and 96.2% of its revenue from operations from its core geographies of Hyderabad and the rest of Telangana and Andhra Pradesh, respectively.
The company offers 740 routine and 870 specialised pathology tests and nearly 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30. They have designed preventive and wellness packages to monitor or prevent/ treat health conditions.
The company has implemented the "hub and spoke" model in which specimens are collected across multiple locations within a catchment area or a region for delivery to reference laboratories for diagnostic testing. This, it said, helps provide greater economy of scale and consistency of testing procedures and results.
Its flagship centre is co-located with its national reference laboratory at Himayatnagar in Hyderabad.
Financials
Other Highlights (FY21)
They cater to individual and institutional customers.
The individual consumer business constituted 93% and 92% of its revenue from operations for the three months ended June 30, 2021, and FY21, respectively.
Between FY17 and FY20, operating income grew at an annualised rate of 15%.
The company is debt free.
Peers
Vijaya Diagnostics is comparable with its listed peers, including Dr. Lal Path Labs Ltd., Metropolis Healthcare Ltd. and Krsnaa Diagnostics Ltd.
Risks
Business is concentrated around south India, mostly in Telangana and Andhra Pradesh, and any social, political, economic disruption, natural calamities or civil disruptions can impact operations.
Outstanding legal cases against the company like criminal proceedings against Chief Operating Officer Sura Suprita Reddy could impact the company.
Losses of group companies could impact business and reputation in future.
The company leases testing equipment and reagents from third-party vendors and suppliers for a fixed term, which faces the risk of termination of leasing contracts.
Failure or malfunction of equipment could lead to risk of liability claims and affect reputation.
Diagnostic centres are subject to stringent health and safety laws and non-compliance could pose risk to operations.
The company's trademark has received only partial approval and there are objections against the corporate logo. Hence, there is risk of infringement.
Reliance on information technology systems and third-party platforms for operations poses cyber attacks and system failures.
High dependence on individual customers; any negative impact on brand value could impact business.