The initial public offering of Vijaya Diagnostic Centre, a leading diagnostic chain in south India, is subscribed 4.54 times so far as it has received bids for 11.36 crore equity shares against IPO size of 2.50 crore equity shares on September 3, the final day of bidding.
Retail investors have put in bids for 109 percent of the portion reserved for them and employees' bids stood at 98 percent of the portion set aside for them.
The part set aside for qualified institutional buyers is subscribed 13.07 times and that of non-institutional investors has seen 1.32 times subscription.
The Hyderabad-based diagnostic chain operator aims to garner Rs 1,895 crore through public issue which is a complete offer for sale by promoter (Dr S Surendranath Reddy) and investors (Karakoram, and Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1).
The company raised Rs 566 crore from anchor investors on August 31, a day before issue opening, at a price of Rs 531 per equity share.
Vijaya Diagnostic Centre is the largest integrated diagnostic chain in southern India, by operating revenue, and also one of the fastest-growing diagnostic chains by revenue for FY20. The company offer an onestop solution for pathology and radiology testing services to their customers through 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.
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For Q1FY22 and FY21, the company derived 95.91 percent and 96.20 percent of revenue from operations from the core geographies,
Hyderabad and rest of Telangana and Andhra Pradesh.
"Several factors, including the strength of the brand, integrated services model, quality of the diagnostic services, centre infrastructure and customer experience, convenience of the operational network and home collection in the core geographies are important differentiating factors in customers choosing Vijaya Diagnostic Centre as the preferred diagnostic service provider. However, steady cash generation, superior balance sheet, decent return ratio and healthy outlook for healthcare industry in the country augur well for the company. Thus, we recommend to 'subscribe' the issue," said Ashika Stock Broking.
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The brokerage feels in terms of the valuations, on the higher price band, the company demands a P/E multiple of 63.8x based on FY21 post issue fully diluted EPS. "Almost all listed peers are trading in the range of 55x – 90x and industry average is at 78x. Despite of reporting better return ratios compared to peers, Vijaya Diagnostic is valued at discount to peers. Thus, issue appears attractive for investment."Disclaimer
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