Vijaya Diagnostic Center Limited IPO

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1. They are the largest integrated diagnostic chain in southern India, by operating revenue, and also one of the fastest-growing diagnostic chain by revenue for fiscal year 2020.

2. They have 81 diagnostic centres and 11 reference laboratories across 13 cities and towns in the states of Telangana and Andhra Pradesh and in the National Capital Region and Kolkata as on June 30, 2021

3. 96% revenue comes from Andhra and Telengana Region.

4. They offer 740 routine and 870 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines.

Strengths of Vijaya Diagnostic

1. Largest and fastest growing diagnostic chain with dominant position in south India
2. High brand recall driving high individual consumer business share and customer stickiness
3. Dedicated management team with significant industry experience.

Industry Analysis of Vijaya Diagnostic

1. Indian diagnostics market was valued at approximately ₹ 710 billion to ₹ 730 billion in the fiscal year 2021. And, is projected to grow at CAGR of around 12% to 13% to reach approximately ₹ 920 billion to ₹ 980 billion by fiscal year 2023.
2. The diagnostics market in Telangana and Andhra Pradesh, is projected to grow to approximately ₹ 120 billion to ₹ 130 billion by fiscal year 2023.
3. 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.

Risk in the business of Vijaya Diagnostic

1. A significant portion of the operations are concentrated in the states of Telangana and Andhra Pradesh in south India.
2.The diagnostics industry in India is highly competitive with several companies present in the market, and therefore it is challenging to improve market share and profitability.

Objects of the Vijaya Diagnostic Center Limited IPO:

Offer Comprises of Offer for sale up to 35,688,064 Equity Shares by existing investors.
DRHP of Vijaya Diagnostic Center Limited IPO
RHP of Vijaya Diagnostic Center Limited IPO

Vijaya Diagnostic Center Limited IPO Details:

Open Date: Sep 01 2021
Close Date: Sep 03 2021
Total Shares: 35,688,064
Face Value: ₹ 1 Per Equity Share
Issue Type: Book Built
Issue Size: 1895 Cr.
Lot Size: 28 Shares
Issue Price: ₹ 522 - 531 Per Equity Share
Listing At: NSE,BSE
Listing Date: Sep 14 2021

Promoters And Management:

i. Dr. S. Surendranath Reddy, is the executive Chairman of the Company. He holds a bachelors degree in medicine from Shri Venkatesvara University and a provisional degree of Doctor of Medicine in Radiology from Osmania Medical College, Hyderabad. He has over 19 years of experience with the Company. He is a life member of the Indian Radiological and Imaging Association. He has also received an award from Abbott for leadership in in-vitro diagnostics and an award for the ‘Healthcare Entrepreneur of the year” in 2019 from Six Sigma Star Healthcare, New Delhi. ii. Sunil Chandra Kondapally, is the Executive Director of the Company. He has been associated with the Company since incorporation. He holds a bachelors degree in science in electrical engineering from Florida State University.He has over 17 years of experience in the field of pharmaceutical industry. He founded a pharmaceutical services company Trikona Pharmaceuticals Private Limited in 2016 and QPS Bioserve India Private Limited in 2004 and, which focuses on the development of innovative pharmachemical products. He has worked in operations, quality accreditation, finance, marketing and network expansion departments of the Company since its incorporation. iii. S Geeta Reddy, is a Non-Executive Director of the Company. She holds a bachelors degree in law from Osmania University.She is enrolled as an Advocate with the Andhra Pradesh High Court in 1986. She is on the board of directors of various companies such as, Sura Agritech Private Limited, Iffco Kisan SEZ Limited, Namrata Diagnostic Centre Private Limited, Vijaya Hospitals Private Limited and Doctorslab Medical Services Private Limited.

Financials of Vijaya Diagnostic Center Limited IPO:

Particulars (in Cr.) Mar-21 Mar-20 Mar-19
Sales 376 338 292
COGS 58 43 40
Changes in Inventories 0 0 0
Employee Benefit Expenses 57 62 53
Other expenses 96 99 90
Operating Profit 165 134 109
OPM % 43.88% 39.64% 37.33%
Other Income 11 15 10
Interest 15 15 13
Depreciation 50 50 40
Profit before tax 111 84 66
Tax Exps 27 20 19
Net Profit 84 64 47
NPM % 22.34% 18.93% 16.10%
No. of shares 10 10 10
EPS in Rs 8.40 6.40 4.70

Comparison With Peers:

Company Revenue EBITDA OPM PAT NPM ROCE P/E %3Y Return
Lal Path labs 1581 577 30% 292 18.47% 35% 80 100%
Metropolis 1182 376 32% 183 15.48% 36% 56 78%
Vijaya Diagnostic 376 165 43% 84 22.34% 40% 63 NA

Recommendation on Vijaya Diagnostic Center Limited IPO:

Review and Recommendation of Vijaya Diagnostic IPO from InvestorZone is 4/10. 1. Sector as a whole has given excellent return in the last 3 years. And healthcare diagnostic market is projected to grow at CAGR of around 12% to 13% to reach approximately ₹ 920 billion to ₹ 980 billion by fiscal year 2023. 2. Vijaya diagnostic has shown excellent growth in their revenue and same is expected to grow in coming years. 3. It is a debt free company. 4. P/E =62. This is where problem is. They have not left much on the table for the investors. Metropolis is currently trading at 56 P/E and Dr.Lal Path Lab, leader in North India is trading at P/E of 80.. Had the IPO come at 40 P/E, it would have given good return to the investors.

Lead Manager of Vijaya Diagnostic Center Limited IPO:

  1. Edelweiss Capital Limited
  2. ICICI Securities Limited
  3. Kotak Mahindra Capital Company Limited

Registrar of Vijaya Diagnostic Center Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Vijaya Diagnostic Centre Limited 3-6-16 & 17, Street No. 19, Himayatnagar Hyderabad, 500 029 Phone: +91 40 2342 0411 Email: ir@vijayadiagnostic.in Website: https://www.vijayadiagnostic.com/

Discussion on Vijaya Diagnostic Center Limited IPO:

6 Comments

    Shareholders of Lal Path Lab and Metropolis has made good returns in the last 3 years in the diagnostic shares.

    Reply

    Problem with Private Equity selling in the IPO is, they try to get maximum value in the stock..

    Reply

    Very good company……Vijaya Diagnostic looks a very good company….But again nothing much left on table……

    Coming at P/E of 62…. While Metropolis is available at 56 and Lal Path lab at 80…..

    40 ke P/E pe lata toh aag lagata. .

    Reply

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