Khambatta Securities' research report on Krsnaa Diagnostics
Krsnaa Diagnostics Limited’s (KDL’s) healthy core business performance from a high base in the corresponding quarter of the previous year was driven by a robust increase in test volumes across modalities. After factoring in procedural delays around the launch of some of the remaining centres from those listed in the RHP (41 CT scanners, 2 MRIs, 24 labs and 190 collection centres), management expects all of them to be operational by the end of 3Q FY23. KDL has won 4 new projects in Rajasthan, Maharashtra, and the two new geographies of Delhi and Tripura with an average duration of >9 years, requiring deployment of 41 CT scanners and 1 MRI, and telereporting across all districts of Tripura. Management reiterated its target of 2x revenues by FY24. KDL has a high share of long-term contracts offering revenue visibility, and with its high conversion ratio, we believe that the company is well-placed to benefit from the tendering of PPP projects across states in the coming quarters and years. The KDL stock has seen a sharp correction since its listing, out of which recent declines can be partly attributed to income tax searches at the company’s offices. Management clarified that no income tax claim or demand has been made yet in relation to the search.
The stock is currently trading at an attractive valuation of 10x FY24E forward EPS. Revising our forecasts based on the latest data-points, we value KDL at 18x (lowering from 20x to factor in emerging incremental risks) FY24E EPS, reiterating a BUY rating with a target price of Rs 868 (reduced from Rs 1,106) and upside of 79%.
At 16:01 hrs Krsnaa Diagnostics was quoting at Rs 483.65, up Rs 1.00, or 0.21 percent.
It has touched an intraday high of Rs 485.35 and an intraday low of Rs 476.05.
It was trading with volumes of 3,715 shares, compared to its thirty day average of 9,916 shares, a decrease of -62.54 percent.
In the previous trading session, the share closed up 0.26 percent or Rs 1.25 at Rs 482.65.
The share touched its 52-week high Rs 957.55 and 52-week low Rs 455.00 on 02 September, 2021 and 29 August, 2022, respectively.
Currently, it is trading 49.49 percent below its 52-week high and 6.3 percent above its 52-week low.
Market capitalisation stands at Rs 1,518.55 crore.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.