Ahead of the issue opening, Suraksha Diagnostic raised ₹253.87 crore from 12 institutional investors, including, Nippon Life India, Kotak Mutal Fund, Aditya Birla Sun Life Trustee, and Quant Mutual Fund, among others.
The public bidding for the IPO will conclude on December 3, 2024.
Suraksha Diagnostic IPO review
Canara Bank Securities: Subscribe
The brokerage has recommended investors with high risk-taking appetite to subscribe to the IPO for long term gains.
Based on the company’s financials for FY24, the P/E (price-to-earnings) ratio stands at 99 times, the IPO appears fully priced, factoring in the near-term positive developments, Canara Bank Securities said in its IPO note.
While the company has promising growth potential in a rapidly expanding sector, its high valuation could pose risks in the short term, the brokerage added.
Sushil Finance: Subscribe for long-term
Suraksha Diagnostic has built a strong reputation in the diagnostic sector in Eastern India and is scaling up with new centers opening. Looking at all the factors, risks, opportunities and valuation, investors with a long term horizon and investors seeking exposure to the healthcare sector can invest in the issue, said Sushil Finance.
Anand Rathi Wealth: Avoid
According to Anand Rathi, the company is valuing at 99.3 times its FY24 earnings. Following the issuance of equity shares, its market capitalisation stood at ₹
2,296.76 crore. The diagnostic sector in which the company operates is highly competitive. Its operations are confined to the eastern part of India, where the issue is richly priced, the brokerage said while adding an ‘avoid’ rating to the IPO.
Suraksha Diagnostic IPO GMP
The company’s grey market premium (GMP) stood nil even after the issue opened for subscription.
However, it is important to note that grey market premiums are just an indicator of how the company’s shares are stacked up in the unlisted market and are subject to change rapidly.
Suraksha Diagnostic IPO price band
The company has set a price band of ₹420-441 per share for its IPO, where investors can bid for 34 shares in one lot and in multiples thereafter. Through this offering, the company aims to raise ₹846 crore.
The IPO is entirely an offer for sale (OFS), which will comprise sale of up to 19,189,330 equity shares by selling shareholders. The promoter selling shareholders include Somnath Chatterjee, Ritu Mittal and Satish Kumar Verma. Meanwhile, OrbiMed Asia II Mauritius Limited, Munna Lal Kejriwal and Santosh Kumar Kejriwal are the investors selling shareholders.
Since the IPO is an OFS, the entire proceeds will go to the selling shareholders.
About 50% of the IPO has been set aside for qualified institutional buyers, 35% for retail investors and the remaining 15% for non-institutional investors.
Incorporated in 2005, Suraksha Diagnostic offers pathology, radiology testing and medical consultancy services. The company has a central reference laboratory with 8 satellite laboratories and 215 customer touchpoints, including 49 diagnostic centres and 166 sample collection centres as of June 30, 2024, across West Bengal, Bihar, Assam, and Meghalaya.
Suraksha Diagnostic plans to invest ₹70 crore every year for the next three-four years to open four-five big centres and 10-12 smaller centres every year. This would be funded from internal accruals.
In financial year 2024, Suraksha’s revenues improved to ₹219 crore as against ₹190 crore in the year-ago period. Meanwhile profit after tax grew multifold to ₹23 crore.
ICICI Securities Ltd, Nuvama Wealth Management Ltd and SBI Capital Markets Ltd are the book running lead managers to the IPO, while Kfin Technologies Ltd is the registrar.
The allotment for the Suraksha Clinic and Diagnostic IPO is expected to be finalised on December 4, while the company’s shares will list on BSE, NSE with tentative listing date fixed as December 6, 2024.
