All about Vijaya Diagnostic IPO

Hyderabad City-based Vijaya Diagnostic Centre (VDC) is going to open for subscription on September 1 and it will remain open for bidding till September 3. The initial public offer (IPO) consists of the issue of equity shares aggregating up to Rs 1,895.04 crore.

As per CRISIL report, the company is the largest integrated diagnostic chain that combines pathology with radiology services in southern India, by operating revenue. It is also one of the fastest-growing diagnostic chains by revenue for fiscal year 2020.

The Issue: 100 per cent Offer for Sale (OFS) of 3,56,88,064 equity shares by the promoter Dr S Surendranath Reddy and investors Karakoram Ltd and Kedaara Capital Alternative Investment Fund (AIF). The price is fixed at Rs 522-531 per share.

Service offerings: VDC offers a comprehensive range of approximately 740 routine and 870 specialised pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30.

Network: 81 diagnostic centres and 11 co-located reference laboratories, across 13 cities and towns in the States of Telangana and Andhra Pradesh and in National Capital Region and Kolkata.

Growth strategy: To deepen its penetration and increase customer base to consolidate leading position in its core market, the plan includes expanding service network by opening additional diagnostic centres.

Expansion plan: Continue to focus on expanding its network through setting up spokes and hub centres in existing catchment, adding reference laboratories and increase its home collection services in core geographies.

Tie-ups: Expanding its presence in identified key cities and towns in adjacent geographies of Telangana and Andhra Pradesh and in east India specifically Kolkata. To supplement its organic growth, it is looking for strategic partnerships with brands in adjacent markets.

High brand recall: Driving high individual consumer business share and customer stickiness. Its recognition for quality diagnostic services results in higher brand recall in its core geographies and enables to have a high share of walk-in customers.

Strong infrastructure: Diagnostic centre operations are supported by front-end centralised IT platform. Radiology equipment includes 15 CT machines, 18 MRI machines and five PET CT/Gamma machines, and a team of 105 radiologists across diagnostic centres.

Robust financial performance: As on June 30, its total income was Rs 125.97 crore. Its total income was Rs 388.59 crore in FY 2021. Average test per customer was 2.8 and operating revenue per customer was Rs 1,214, which are higher as compared to listed peers.

Growth outlook: As per the CRISIL Report, Indian diagnostics market is projected to grow at CAGR of around 12-13 per cent to reach approximately Rs 920 - 980 billion by fiscal year 2023 from Rs 710-730 billion in the fiscal year 2021.

The diagnostics market in Telangana and Andhra Pradesh, the states in which company has a significant presence, is projected to grow from approximately Rs 120 billion at present to Rs 130 billion by fiscal year 2023.

Rise in health awareness and disposable incomes, along with growing demand for better healthcare facilities and increased spending on preventive care and wellness are the key drivers of Indian diagnostics market.