It has now filed papers to raise Rs 4000 crore via an initial public offering.
The public offer of Krsnaa Diagnostics, one of the fastest-growing diagnostic chains in India, has seen a subscription of 1.98 times on the first day of bidding, August 4, as it received bids for 1.41 crore equity shares against offer size of 71.12 lakh equity shares, the subscription data available on exchanges showed.
The IPO size has been reduced to 71.12 lakh shares from 1.27 crore equity shares after the diagnostic chain mopped up Rs 537 crore from anchor investors on August 3.
Retail investors seem to be in a strong position as their reserved portion was oversubscribed by 9.59 times and that of non-institutional investors 15 percent.
Employees have put in bids 21 percent of their reserved portion and qualified institutional investors bought 48 percent of their reserved portion.
Krsnaa Diagnostics, which offers a wide range of diagnostic services such as imaging/radiology services (X-rays, MRI), routine clinical laboratory tests, pathology, and tele-radiology services to private/public hospitals, medical colleges, and community health centres, is planning to raise Rs 1,213.3 crore through IPO.
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The offer comprises a fresh issue of Rs 400 crore and an offer for sale of 85,25,520 equity shares by existing shareholders including PHI Capital Trust, Kitara and Somerset Indus Healthcare Fund. The price band for the offer has been fixed at Rs 933-954 per equity share.
The company will utilise net proceeds from the fresh issue for establishing diagnostics centres in Punjab, Karnataka, Himachal Pradesh and Maharashtra, and repaying of debts.
The firm has an extensive network of diagnostic centres across India with a key focus on non-metro, and lower tier cities and towns. It currently operates 1,823 diagnostic centres that are offering radiology and pathology services across 13 different cities in India. It also operates one of India’s largest tele-radiology reporting hub in Pune which can process large volumes of X-rays, CT scans and MRI scans round the clock, round the year.
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"At IPO's upper price band of Rs 954, company is being valued at 77.9x times earnings, in line with the industry average of 96x. Considering differentiated business model, strong growth prospects, cost competitiveness and sector leadership, we recommend a Subscribe with a long term perspective for IPO," said KR Choksey.
It has been growing operations and revenues at a much faster pace than the industry. Revenues from operations for FY21 amounted to Rs 396 crore, growing at a CAGR of 54 percent over last 4 years.
"The company enjoys leadership status in the public-private partnership (PPP) diagnostics industry, which should help it to leverage rising demand both in PPP segment as well as overall diagnostics market in India. PPP model also helps in achieving costs synergies and revenue visibility, helping it to become cost competitive," said KR Choksey.
"While the company generates two-thirds of its revenues from PPP, receivable days have improved from 96 days in FY18 to 66 days in FY21, reflecting significant reduction in working capital needs," the brokerage added.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.