Vijaya Diagnostics IPO – Problem Details and Review

Vijaya Diagnostics Center Ltd IPO (Vijaya Diagnostics IPO) Details

Hyderabad-based Vijaya Diagnostics Center is now launching an IPO. The IPO would open for subscription on September 1, 2021. Vijaya Diagnostics Center Limited is one of the fastest growing diagnostic chains in South India. Company generated stable revenue growth in the past 3 years. Margins are improving year on year. Should you invest in? Vijaya Diagnostics IPO? What are the risk factors for this IPO?

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About Vijaya Diagnostics Center Limited

Company is the largest integrated diagnostic chain in South India. It is one of the fastest growing diagnostic chains in terms of turnover. It provides a total solution for pathology and radiology testing services to its customers through its extensive operational network. The company has 81 diagnostic centers and 11 reference laboratories in 13 cities and towns in Telangana, Andhra Pradesh, NCR and Kolkata. The income is approx. 95% in Telangana and Andhra Pradesh.

Vijaya Diagnostics IPO Details

IPO opening date 01-sep-21
Closing date IPO 03-sep-21
Problem type Book built edition IPO
Nominal value Rs 1 per share share
IPO Price Range Rs 522 to Rs 531 per share share
Lot size: 28 shares
min. Order Quantity 28 shares
Mention at BSE and NSE
Problem size Total Size: Rs 1,895.04 Crores

Vijaya Diagnostics IPO RHP link:

What are the competitive forces of Vijaya Diagnostics Center Limited?

1) It is one of the largest and fastest growing diagnostic chains in South India.

2) Affordable, comprehensive service provider for diagnostic solutions with a focus on superior quality.

3) Company has strong technical capabilities, advanced diagnostic testing technology and robust IT infrastructure.

4) The laboratories are nationally accredited.

5) High brand memories lead to high individual consumer activity.

What are the objectives of the offer?

Here are the objects of the offer.

1) Take advantage of the advantages of a stock exchange listing.

2) To make an offer for sale (OFS) of 35,688,064 shares for Rs 1,895 Crores.

Who is the promoter of Vijaya Diagnostics Center Limited?

dr. S. Surendranath Reddy is the promoter of the company.

What is the company’s financial track record?

Here are the company’s total assets, revenues and profits over the past 3 years.

Fiscal Year Closing / Period End Closing (Amt in Mns)
Particularities FY19 FY20 FY21
Total assets 4,064.3 4.822.6 5,409.4
income 3.029.4 3,541.8 3,885.9
Profit after taxes 462.7 625.1 849.1
Gain % 15.3% 17.6% 21.9%

Why invest in the Vijaya Diagnostics IPO?

Here are the positive factors in this business.

1) Vijaya Diagnostic Center is one of the fastest growing diagnostic chains in South India. Company has strong technical capabilities with robust IT infrastructure.

2) Company posted stable revenue growth in the past 3 years. The earnings of FY19, FY20 and FY21 are Rs 302.9 Crores, Rs 354.1 Crores and Rs 388.5 Crores respectively.

3) Operating margins have improved year over year for the past 3 years. The margins for FY19, FY20 and FY21 are Rs 46.2 Crores, Rs 62.5 Crores and Rs 84.9 Crores respectively.

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Vijaya Diagnostics IPO Risk Factors

1) Company will not receive any proceeds from this IPO. The entire proceeds of the IPO would go to the selling shareholders who sell the shares.

2) Its business and prospects may be adversely affected if they are unable to maintain and expand its brand name and brand image.

3) Vijaya Diagnostic CEO, Sura Suprita Reddy, was named in a criminal proceeding.

4) Business activities, financial condition can be affected by global health epidemics such as covid-19. Its lasting effect cannot be predicted.

5) Any interruptions at the flagship center and other diagnostic centers may affect its ability to process diagnostic tests, which in turn may affect its operations.

6) The company’s main business is in Telangana and Andhra Pradesh. Any loss of business in such regions could adversely affect its business

7) One of its subsidiaries MDSL did not comply with the listing rules. However, it has been rectified. The company has also filed a delayed filing under regulation 31(4) of the takeover regulation and in respect of shares it holds in its capacity as promoter of MDSL. There is no guarantee that SEBI or BSE will not take any action in the future.

8) There are pending legal proceedings involving the company, subsidiaries and directors, which could adversely affect business operations.

9) Company has commissioned and paid for an industry report and addendum to CRISIL, specific to the purpose of the IPO offering, to be used for the industry-related data in this RHP.

10) Its group companies have suffered losses in the past and may also incur losses in the future.

11) Investors should read the full risk factors indicated in the RHP of the IPO document before investing in this IPO.

Vijaya Diagnostics IPO Dates for Enrollment, Assignment and Listing

Offer open 01-sep-21
Close offer 03-sep-21
Completion of assignment 08-sep-21
Initiation of refunds 09-sep-21
Credit on Demat account 13-sep-21
Share IPO date 14-sep-21

Is the Vijaya Diagnostics IPO Price Too Expensive or Too Expensive?

The IPO price range is Rs 522 to Rs 531 per share.

1) At the top price range of Rs 531 and the last 3 years average EPS of Rs 6.92, the P/E ratio comes out at 77x.

2) If we take FY21 EPS of Rs 8.26, the P/E ratio comes out at 64x.

3) Means the company is asking for an issue price in the P/E range of 64x to 77x.

4) Currently, there are listed peers such as Dr. Lal Path Labs trading at P/E of 107x (highest) and Metropolis Healthcare trading at P/E of 74x (lowest) and the industry average is 90x. Therefore, the IPO price of Rs 531 at a P/E of 64x to 77x is reasonably priced.

What is Vijaya Diagnostics IPO GMP?

Vijaya Diagnostics IPO GMP is not yet known as we have not been able to see any major transactions. GMP is nothing but the premium at which the stock is traded in the offline market. This is only an indication of the IPO price as it is a disorganized market.

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Vijaya Diagnostics IPO – Review and Recommendation

I generally prefer Vijaya Diagnostic Center for regular health checks owned by its brand. In fact, I’m planning to go to their center this Friday, and you may be reading this article when I’m at their diagnostic center.

Vijaya Diagnostics Center Limited is the fastest growing diagnostic chain in South India. With its advanced testing technology, it provides a total solution for pathology and radiology testing services to their customers through their extensive operational network.

While revenues did not grow aggressively, it has posted stable revenue growth over the past 3 years.

Margins are improving year on year.

The share price is fully priced.

Recently, we were able to see a number of IPOs listed below the listing price. Looks like the IPO party is over. Krsnaa Diagnostic IPO listed at a 7% premium to the IPO price, but today it is trading at 5% below the IPO price, so don’t invest in companies for listing gains now.

Given the positive factors discussed above, investors can invest from a medium to long-term perspective. Based on current stock market conditions, you may not get any listing profits.

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Suresh KP
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