Krsnaa Diagnostics finalised its initial public offering date and is going to make its market debut on Wednesday. The IPO which is set to open on August 4, will close its subscription on August 6. Any and all anchor bookings will take place on August 3, a day before the IPO opens for the subscription. The price band for the issue was listed as Rs 933 to Rs 954 per equity share with a face value of Rs 5 per share. It is a book-built issue IPO. The issue carries a grey market premium of Rs 400, which suggests that the shares are trading for a premium of Rs 1,333 to Rs 1,354 per share on the unlisted market.
The Krsnaa Diagnostics IPO has a lot size of 15 shares as the minimum with an accompanying application amount of Rs 14,310. On the higher end of the lot, the size is 195 shares with an application amount of Rs 186,030. The retail investors for the issue can apply for up to 13 lots at the higher end of the lot size. In terms of investor allocations, however, the retail portion is just 10 per cent. The qualified institutional buyers (QIBs) have a reservation of 75 per cent and the non-institutional investors (NIIs) have a reservation of 15 per cent for the IPO.
Krsnaa Diagnostics is looking to gather a total of Rs 1,213.33 crore through its public issue. The issue itself consists of a fresh issue of Rs 400 crore as well as an offer for sale (OFS) that aggregates to Rs 813.33 crore with 8,525,520 equity shares with a face value of Rs 5 per share.
Speaking on the company and the growth it has seen, Ajit Mishra, VP of Research from Religare Broking said, “The size of the diagnostic industry is estimated to be approximately Rs. 710 billion in FY21, registering a healthy CAGR of 13 per cent to 14 per cent over FY17-FY21, echoing the growth from healthcare delivery services. The industry is expected to grow at approximately 15 per cent and achieve a value of Rs. 920 billion FY23. This would be led by increased demand for in-patient treatments and out patients’ treatments. Moreover, as literacy rates and disposable incomes rise, individuals increasingly demand better healthcare facilities and quality of care, leading to high volume growth of in-patients and out-patient treatments. The rise in healthcare demand has also received a lift from the increase in urbanisation and lifestyle-related diseases, such as cardiac diseases, diabetes and cancer, prompting many healthcare-service providers to enhance their offerings in metropolitan areas and Tier-I and II cities.”
The company plans to use the net proceeds from the IPO to fund the cost of establishing diagnostics centres in Punjab, Karnataka, Himachal Pradesh, and Maharashtra. The remainder of the funds will go towards the repayment and pre-payment of the firm’s borrowings either fully or partially. Part of the proceeds will also be used for general corporate purposes.
The company was incorporated in 2010 and was dubbed as one of the fastest-growing diagnostics chains in India. It has a diverse range of diagnostic services that it provides, which include imaging/radiology services (X-rays, MRI, etc.), routine clinical laboratory tests, pathology, and teleradiology services. The main customers for the company are private and public hospitals, medical colleges, and community health centres. Krsnaa diagnostics has key strengths that make it an attractive IPO to subscribe to. For instance, it is one of the largest differentiated diagnostics providers in India, which also has a wide variety of services for the same. It also has a strong brand image that is built upon affordable pricing and quality healthcare services. The company has a strong national-level market footprint as it is present in around 13 cities across the country.
Should You Subscribe to the Krsnaa Diagnostics IPO?
Financially speaking, the company managed to maintain a strong performance. The company’s overall income for the fiscal year ended March 31, 2020, was Rs 271.38 crore. This was up from the previous year’s Rs 214.31 crore. In FY20, the company saw an increase in its net losses from Rs 58.05 the previous year to Rs 111.95 crore. However, Krsnaa Diagnostics did see a sharp drop in expenditure and higher revenue. The net profit and the revenue recorded for the nine-month period ended December 31, 2020, was Rs 195.93 crore and Rs 562.7 crore respectively. This trend was a result of higher revenue from operations which was due to the onset of the pandemic.
“Krsnaa is well placed to benefit from growing industry trends on the back of its scale, strong brand equity, and extensive footprint across India. Further, its PPP agreements, to deploy diagnostic centres for its radiology and pathology services are typically long-term contracts that ensure visibility of revenues for its operations. Going forward, the company plans to expand its network of diagnostics centres and also expand its offerings of diagnostic services. It also plans to increase its digital footprint and continue to focus on improving its profitability and efficiency. The financial performance has been healthy for the company. With promising industry growth prospects coupled with company’s strong execution track record, we have a positive on the company for long term,” said Mishra.
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