Vijaya Diagnostic Centre IPO plans to raise Rs. 1,895 crores from its public offer which opens on 1st Sept. and closes on 3rd Sept. 2021. The price band is Rs. 522 – 531 per share. Vijaya Diagnostic Centre IPO is entirely an offer for sale by promoters Karakoram Ltd., Kedaara Capital Alternative Investment Fund and S Surendranath Reddy. The OFS will dilute promoters and shareholders’ stake in this company by 35%.

Vijaya Diagnostic Centre IPO Details:

Issue Details
Bid OpensWed, 1st September, 2021
Bid Closes Fri, 3rd September, 2021
Face Value (₹)₹ 1/-
Issue Size (₹ Cr)₹ 1,862 – 1,894 Cr
Bid Lot28 Shares 
Price Band₹ 522 – 531
Issue Structure : 
QIB50% of the net offer 
NIB15% of the net offer,  283.06 Cr
Retail35% of net offer (12,438,323 Shares, ₹ 660 Cr)
Appls for 1x Retail4.44 acs
BRLMsICICI Securities, Edelweiss Financial, Kotak Mahindra Capital
RegistrarKFin Technologies Pvt. Ltd.

NEW: Related Posts: Some Thoughts on Vijay Diagnostic Centre Listing

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, Vijaya Diagnostic Centre IPO garnered raised ₹566 crore from 29 anchor investors. Fidelity Management Research, Fidelity Investments, Aberdeen, Abu Dhabi Investment Authority, Kuwait Investment Authority and Government Pension Fund Global are among the anchor investors. Further ICICI Prudential Mutual Fund (MF), Nippon India MF, Franklin Templeton MF, SBI Life Insurance and Kotak Life Insurance too participated in the anchor book.

About Vijaya Diagnostic Centre IPO

  • Vijaya Diagnostic Centre Limited was established in 1981 at Hyderabad.
  • Today, Vijaya Diagnostic Centre Ltd. 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 offers a one-stop solution for pathology and radiology testing services to customers through its extensive operational network.
  • It has 81 diagnostic centres and 11 reference laboratories across 13 cities and towns in the states of Telangana, Andhra Pradesh, National Capital Region and Kolkata as on June 30, 2021.
  • Vijaya Diagnostic Centre offers a comprehensive range of approximately 740 routine and 870 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30, 2021.
  • t offers a comprehensive range of approximately 740 routine and 870 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines.
  • It also offers a broad spectrum of health and wellness packages to its customers as per their requirements.
  • Its diagnostic services are provided by a medical professional team consisting of 74 laboratory doctors, 19 physicians, 105 radiologists and 1,027 well-trained technical staff in its operational network.
My Profile | Vijaya Diagnostic Centre

Vijaya Diagnostic Centre IPO: Financials

Particulars/ (₹ In Cr)Q1fy22Q1fy21202120202019
Revenue from Operations122.6951.71376.75338.82292.59
Revenue Growth (%)137.27%11.19%15.80%
EBITDA as stated60.1416.12177.88147.98118.48
Adj. EBITDA as stated56.8613.84165.98132.62108.12
Profit Before Tax44.220.65112.1283.4365.32
Net Profit for the period33.331.8184.9162.5146.27
Equity Share Capital10.24.534.534.534.53
Reserves382.13271.89354.47270.01200.44
Net worth as stated392.91275.83359.23274.14207.01
RoNW (%)8.48%^0.66%^23.64%22.80%22.35%
NAV (₹ )~38.5327.0535.2326.8920.32
ROCE (pre cash) (%)15.25%0.85%42.00%33.28%30.06%
FV1
EPS  (₹ )3.230.198.266.134.5
IPO Price531
PE 64.29
Market Cap5416
Market Cap  /  Sales14.4

Pros

  • Largest and fastest growing diagnostic chain with dominant position in South India, well positioned to leverage the high growth in Indian diagnostics sector.
  • Integrated diagnostics provider that offers one-stop solution at affordable price
  • High brand recall and commitment to superior quality driving high individual consumer business share and customer stickiness
  • Robust technical capability and state of the art technology with strong IT infrastructure
  • Long track record of delivering consistent profitable growth, with strong cash generation and return metrics.
  • Dedicated management team with significant industry experience.

Cons

  • Significant portion of its operations are concentrated in the states of Telangana and Andhra Pradesh in south India.
  • The diagnostics industry in India is highly competitive with several companies present in the market
  • Group companies have been making losses.

Vijaya Diagnostic Centre IPO: Assessment

  • As per CRISIL Research , the Indian out-of-hospital diagnostic industry is valued at ₹ 390 billion to ₹ 395 billion in the fiscal year 2020, having achieved a CAGR of approximately 12% over fiscal years 2017 to 2020.
  • The diagnostics industry in India is highly competitive and fragmented. As per CRISIL, standalone centres dominate the Indian diagnostic market with approximately 45% to 50% market share, while hospital-based centres have approximately 35% to 40% market share for the fiscal year 2020. Diagnostic chains have approximately 12% to 17% market share for the fiscal year 2020. The industry has witnessed a shift from standalone centres to diagnostics chains due to increasing trend of patients’ reliance on organized diagnostic providers for quality services and unavailability of complex tests with standalone centres.
  • Deeper penetration of diagnostic chains has given the out-of-hospital market a push in the past three fiscals. Diagnostic chains have not only increased penetration by way of consolidation with standalone diagnostic players, but also tied up with hospitals to cater to their diagnostic services.
  • Vijaya Diagnostic Centre operates on B2C model and primarily derives almost all of our revenues from walk-in customers.
  • It derived 96.2% of its revenue from operations from its core geographies (Hyderabad and the rest of Telangana and Andhra Pradesh).
  • Vijaya has consistently posted strong performance in terms of operating growth and profitability in last few years. Revenues have grown at a CAGR of 13.5% over FY19-21. he period saw EBITDA growth of 23.9% and 35.5% growth in PAT.
  • Company has a strong cash flow position, with cash generated from operations standing at Rs 50.94 crore in Q1 FY22, Rs 129.64 crore in FY2021, Rs 106.11 in FY2020 and Rs 90.52 crore in FY2019.
  • COVID-19 testing has fueled demand for both pathology and radiology testing services.
  • In Q1 FY2022, consolidated sales were up by 137.26% to Rs 122.69 crore aided by increase in covid related testing volume compared to Q1 FY2021
  • Vijaya Diagnostic Centre operates on ‘hub and spoke’ model which provides economies of scale and cost optimization benefits,Integrated network. This coupled with high B2C business has led to better operational perforamce. Vijaya Diagnostic Centre RONW stands at 23.64% and return on capital employed at 42.00% during FY21.
  • Key financial parameters of major diagnostics players:
Key financials (FY20)Operating income ₹ millionCAGR FY17 to FY20OPBDITCAGR FY17 to FY20PAT ₹ millionCAGR FY17 to FY20
Metropolis8,56913%2,17611%1,2764%
Thyrocare4,35412%1,74713%88427%
Vijaya3,38815%1,32618%62524%
Medall3,258-1%654-5%-20368%
Suraksha1,5708%3,40014%15050%
Lucid71128%11824%1920%
Tenet339n.m.-55n.m.-92n.m.
  • Vijaya Diagnostic Centre operates in both diagnostic and radiology segment while most of its peers have presence in diagnostic business only.
  • n terms of growth in the number of patients served, Vijaya has registered a robust CAGR of 14% during fiscal year 2017 to 2020. This growth in patients is higher when compared to the three major players, DLPL (13%), Metropolis (13%) and Thyrocare (10).
  • Vijaya Diagnostic Centre IPO was last reported to be commanding a GMP of about Rs. 15 but deals have been few. There has been a fall in GMP from peak of Rs. 40 commanded initially.
  • Vijaya Diagnostic Centre IPO is offered at a PE of ~ 64 times its FY21 earnings. Due to a robust Q1FY22 the TTM P/E multiple is lower at about 47x. However COVID-19 testing has fueled demand for both pathology and radiology testing services and Q1FY22 performance cannot be annualized.
  • Vijay Diagnostic Centre IPO Looks OK when compared to peers and has some merits. However with many IPO hitting the market, the listing tone could be weak. The returns from IPO are greatly linked to market sentoiment in coming days.
  • Another diagnostic chain Krsnna Diagnostics had earlier this month debuted at a little premium but subsequently ended below the IPO price.
  • Compared with Krsnaa Diagnostics IPO, Vijaya Diagnostic Centre IPO appears better placed in term of valuations but still there may not be much left for the investors.

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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