Vijaya Diagnostics Rs 1,894 crore IPO (initial public supplying) will open for subscription tomorrow on September 1. The Sout-India based integrated diagnostic chain’s IPO is totally an Offer For Sale (OFS) by current shareholders of the firm and will not contain any fresh concern of equity shares. The OFS will see promoter S. Surendranath Reddy sell element of his holdings in the firm along with investors such as Karakoram Ltd and Kedaara Capital AIF 1. Ahead of the public concern of the firm, shares of Vijaya Diagnostics are trading with a weak premium of Rs 30 per share in the grey market place, according to Yash Gupta, Equity Research Analyst, Angel Broking.
Issue specifics
Investors can bid for the shares of Vijaya Diagnostics by means of the IPO in a fixed price tag band of Rs 522-531 per share. The bid lot for the concern has been set at 28 shares and multiples thereafter. This translates into a minimum investment of Rs 14,868 per investor. However, workers of the firm, applying for the IPO, are slated to get a discount of Rs 52 per share.
Half of the concern is reserved for Qualified Institutional Buyers (QIB) although 15% is for Non-Institutional Investors (NII) and the remaining 35% for retail investors.
The IPO is totally an OFS, exactly where the promoter S. Surendranath Reddy will sell upto 50.98 lakh equity shares. Karakoram Ltd, an investor in the firm, will be offloading 2.94 crore equity shares from the 3.93 crore owned by them. Further, Kedaara Capital AIF 1 will sell 11.02 lakh equity shares of Vijaya Diagnostics. Currently, Kedaara Capital AIF 1 holds 14.69 lakh shares of the firm. The promoter shareholding in the firm will drop to 32.78% post concern from the present 37.78%. Meanwhile, public shareholding in the firm will enhance to 45.22% from 40.22%.
Should you subscribe?
Vijaya Diagnostic Centre is the biggest integrated diagnostic chain in southern India, by operating income, and also one of the quickest-increasing diagnostic chains by income for the economic year 2019-20, according to CRISIL. Othe strengths of the firm contain higher brand recall and commitment to a superior good quality driving higher person customer organization share and client stickiness. Vijaya Diagnostics also boasts robust technical capability and state of the art technologies with Strong IT infrastructure.
The firm has a extended track record of delivering constant lucrative development, with robust money generation and return metrics. “Considering the FY-21 adjusted EPS of Rs.8.26 on post issue basis, the company is going to list at a P/E of 64.26 with a market cap of Rs.54,144 mn while its peers namely Dr. Lal Path Labs and Metropolis Healthcare are trading at a P/E of 80.66 and 56.55 respectively,” stated analysts at Marwadi Shares and Finance Limited. The brokerage firm has a Subscribe rating on the IPO, although adding that Vijaya Diagnostics is nicely-positioned to leverage the higher development in the Indian diagnostics market.
Meanwhile, Yash Gupta, Equity Research Analyst, Angel Broking believes the IPO price tag pinned by Vijaya Diagnostics is on the larger side of the not too long ago listed diagnostic firms. “IPO has been priced at price to earning of 64 times of FY2021 earning which is near around the listed players in India. We have a neutral outlook on Vijaya Diagnostic centre IPO,” he added.
Shortage of skilled manpower, higher expense of technical advancement, intense competitors, and Geographical concentration to south India are some of the dangers connected with the firm, Kotak Securities highlighted. The brokerage firm has no rating on the public concern.