Krsnaa Diagnostics IPO Review

Krsnaa Diagnostics Ltd has fixed a price band of ₹933-954 a share for its initial public offer (IPO). The IPO will open for subscription on 4 August and close on 6 August. The IPO will consist of a fresh issue of ₹400 crore and an offer for sale of up to 8.53 million shares by its existing promoters and shareholders. he OFS comprises sale of 1.6 million shares by PHI Capital Trust-PHI Capital Growth Fund-I, up to 3.34 million shares by Kitara , up to 3.56 million shares by Somerset Indus Healthcare Fund I Ltd and up to 21,380 shares by Lotus Management Solutions.

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Krsnaa Diagnostics IPO Details:

Bid OpensWed, 4th August, 2021
Bid Closes Fri,6th August, 2021
Issue DetailsFresh Issue of Equity Shares upto ₹ 400 Cr + Offer for Sale of upto 8,525,520 Equity Shares
Face Value (₹)₹ 5/-
Issue Size (₹ Cr)₹ 1,195 – 1,213 Cr
Bid Lot15 Shares 
Price Band₹ 933 – 954
Issue Structure : 
QIB75% of the net offer
NIB15% of the net offer ( ~ 179.00 Cr)
Retail10% of net offer (1,250,874 Shares – 119.33 Cr)
Appls for 1x Retail0,83 Lcs
RegistrarKFin Technologies Pvt Ltd

ANCHOR ISSUE: Ahead of the IPO, Krsnaa Diagnostics Limited garnered Rs 537 crore from 44 anchor investors. The foreign investors include Kuber India Fund, Volrado Venture Partners, HSBC, Tara Emerging Asia Liquid Fund, Societe Generale, Elara India Opportunities Fund, Nomura, Stock Mother Fund, and Segantii India Mauritius. The domestic investors in the anchor issue include Abakkus Growth Fund, ICICI Prudential, HDFC Life Insurance, SBI Mutual Fund, Tata Mutual Fund, Motilal Oswal Mutual Fund, Edelweiss, Nippon Life, Aditya Birla Sun Life, Kotak Mutual Fund, Max Life Insurance, and Kotak Mahindra Life Insurance aAbakkus Growth Fund, ICICI Prudential, HDFC Life Insurance, SBI Mutual Fund, Tata Mutual Fund, Motilal Oswal Mutual Fund, Edelweiss, Nippon Life, Aditya Birla Sun Life, Kotak Mutual Fund, Max Life Insurance, and Kotak Mahindra Life Insurance.

About Krsnaa Diagnostics Limited:

  • Incorporated in 2010, Krsnaa Diagnostics Ltd. is one of the fastest growing diagnostic chains in India.
  • It provides a range of technology-enabled diagnostic services such as imaging (including radiology), pathology/ clinical laboratory and tele-radiology services to public and private hospitals, medical colleges and community health centres pan-India.
  • It has an extensive network of integrated diagnostic centres across India, primarily in non-metro and lower tier cities and towns.
  • As of June 30, 2021, it operated 1,823 diagnostic centres offering radiology and pathology services in 13 states across India.
  • As of June 30, 2021, they had a team of 190 radiologists, 30 pathologists, 8 microbiologists and more than 2,800 qualified professionals including clinicians, technicians and operators.
  • Promoter and Chairman, Rajendra Mutha, is a first-generation entrepreneur and has over 10 years of experience in the field of pharmacy and diagnostics.

Krsnaa Diagnostics IPO: Financials

Particulars / (₹ In Cr)202120202019
Equity Share Capital6.55.165.16
Instruments entirely equity in nature242.3915.0215.02
Reserves as stated-17.02-217.16-105.11
Net worth as stated231.87-196.98-84.92
Revenue from Operations396.46258.43209.24
Revenue Growth (%)53.41%23.51%
EBITDA as stated358.83-101.26-32.52
Adj. EBITDA as stated106.0575.7763
Profit/Loss Before Tax295.45-158.33-77.73
Net Profit/Loss for the year184.93-111.95-58.06
EPS-Basic (₹ )~71.86-43.53-24.137
EPS-Diluted (₹ )12.25-43.53-24.13
RoNW (%)79.76%-56.83%-68.37%
NAV-Basic (₹ )~85.27-76.56-33
FV in Rs. 5
Equity Post IPO15.69
IPO Price954
EPS (excluding EO) FY218.50
PE 112.24
Market Cap2994
Market Cap  /  Sales7.6


  • The company looks like a different and unique diagnostics company
  • It has extensive footprint across various states in India with good infrastructure
  • Its business model is robust with good revenue visibility
  • Well positioned to capitalize on healthcare spending across public and private sectors
  • Scalable and agile business model with efficient cost structure
  • Consistent track record of top line growth
  • Experienced promoters and management team supported by strong employee base


  • Business is capital intensive
  • Fixed pricing for its diagnostic services under the agreement.
  • Company has poor profitability.
  • Payment dependence on public health agencies.

Krsnaa Diagnostics IPO: Assessment

  • The diagnostic industry in India has been estimated to be between ₹710 billion and ₹730 billion in Fiscal 2021, clocking a CAGR of 13% to 14% between Fiscal 2017 and Fiscal 2020. The industry is expected to grow at ~15% between Fiscal 2021 – 23. and Fiscal 2023.
  • PPP models in diagnostics have gained prominence due to govt’s focus on strengthening healthcare services led by various Government programs.
  • The company is well positioned to capitalize on healthcare spending around public and private industries.
  • While things are not bright n profitability front, company has a track record of improving top line. Its total revenue from operations for FY 2021, 2020 and 2019 was Rs 396.46 crore, Rs 258.43 crore and R 209.24 crore, respectively. Thus its revenue grew at a CAGR of 37.5% in this period.
  • The cost of radiology tests provided by the company is 45% – 60% lower than market rates, while the cost of pathology tests provided by the company is 40% – 80% lower than market rates.
  • The company generates ~60% of business from pathology and 40% from the radiology.
  • The company derives substantial portion of revenue from the states of Maharashtra, Rajasthan, and Karnataka. Revenue from the above states represented 74.21%, 65.74% and 70.42% of total revenue in FYs 2019, 2020 and 2021, respectively.
  • Turnover and profits for FY21 include one-time gain from fair value movement of CCPS (Compulsory Convertible Preference Shares) amounting to Rs. 252.78 cr. If we ignore it, then Krsnaa Diagnostics Limited has posted meagre profits or even losses on adjusted PAT basis making P/E comparison with peers meaningless. Thus, Krsnaa Diagnostics Limited seems priced steeply.
  • • Future profits can also get impacted as there is limited scope to increase prices in PPP mode.
  • Krsnaa Diagnostics IPO was last reported to be commanding a GMP of about Rs. 400
  • Despite a good response from anchor investors and a disruptive model, Krsnaa Diagnostics IPO is not a clear cut case for me and I would apply on Day 3 after seeing QOB response. My apprehensions stem both from the fact that issue is expensive and a unstoppable rush for IPOs where quality of is likely to suffer. Also I may wait for some good or better options next week than the IPO currently open (other than Deviyani )

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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