Suraksha Diagnostic is set to launch its Initial Public Offering (IPO) soon, and it has generated considerable interest among investors. Through this Suraksha Diagnostic IPO analysis, we aim to find out if this is a good fit for your portfolio or not.
The IPO is set to open for subscription on 29 November 2024, and will close on 3 December 2024. According to the company’s red herring prospectus (RHP), this initial public offering will consist of an offer for sale of 19.19 million shares (approximately 1.92 crore shares) by existing shareholders. The IPO aims to raise between INR 805.95 crore and INR 846.25 crore, with a price band established at INR 420 to INR 441 per share. Investors can place bids in multiples of 34 shares.
Suraksha Diagnostic IPO will be managed by SBI Capital Markets, Nuvama Wealth Management, and ICICI Securities, while KFin Technologies will serve as the registrar.
Given the previous success of similar companies like Dr. Lal Pathlabs and Thyrocare, there is significant investor interest in Suraksha Diagnostic’s offering. This enthusiasm may influence high valuations based on past performance, prompting investors to closely monitor market signals as they evaluate this opportunity.
Read Also:Â Suraksha Diagnostic IPO GMP, Price, Date, Allotment
Suraksha Diagnostic’s equity shares are proposed to be listed on BSE and NSE and listing is expected on 6 December 2024. Here are some important details about the IPO before we dive deeper into the analysis.
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Suraksha Diagnostic IPO Analysis: Offer Details
- Opening Date: 29 November 2024
- Closing Date: 3 December 2024
- Price Band: INR 420 – 441 per share
- Issue Size: INR 805.95 – 846.25 crore
- Lot Size: Minimum of 34 equity shares
Suraksha Diagnostic IPO Analysis: Offer Structure
Suraksha Diagnostic’s IPO is totally an Offer for Sale and all 1.92 crore shares will be offered by existing shareholders. Selling shareholders in Suraksha Diagnostic IPO are Dr. Somnath Chatterjee, Ritu Mittal, Satish Kumar Verma, OrbiMed Asia ll Mauritius, Munna Lal Kejriwal, and Santosh Kumar Kejriwal.
Private equity investor OrbiMed Asia II Mauritius, which currently holds a 33.35% stake in the company, is also reducing its ownership to 12.88%. Additionally, Santosh Kumar Kejriwal is selling 2.59% of his holdings, leaving him with only 0.03% post-issue.
Suraksha Diagnostic IPO Analysis: Details Of Selling Shareholders And Promoters
| Selling Shareholder | Shares pre-Offer | Shares being offered | Shares post-Offer | % of Shares post-Offer |
|---|---|---|---|---|
| Dr. Somnath Chatterjee (Promoter) | 47,31,836 | 21,32,148 | 25,99,688 | 4.99% |
| Ritu Mittal (Promoter) | 1,04,08,455 | 21,32,148 | 82,76,307 | 15.89% |
| Satish Kumar Verma (Promoter) | 77,76,119 | 21,32,148 | 56,43,971 | 10.84% |
| OrbiMed Asia II Mauritius Limited (Investor) | 1,73,67,448 | 1,06,60,737 | 67,06,711 | 12.88% |
| Munna Lal Kejriwal (Investor) | 11,06,062 | 7,99,556 | 3,06,506 | 0.58% |
| Santosh Kumar Kejriwal (Investor) | 13,48,339 | 13,32,593 | 15,746 | 0.03% |
| Total | 4,27,38,259 | 1,91,89,330 | 2,35,48,929 | 45.22% |
Suraksha Diagnostic IPO Review: Business Overview
Suraksha Diagnostic offers an extensive array of clinical testing, diagnostic solutions, and medical consultation services. As of 31 March 2024, the company operates through a robust network that includes a central reference laboratory, eight satellite laboratories, and 194 customer touchpoints. This network also encompasses 48 diagnostic centers and 146 primarily franchised sample collection centers, serving regions in West Bengal, Bihar, Assam, and Meghalaya. The central reference laboratory is accredited by the College of American Pathologists, ensuring compliance with stringent quality standards.
The company maintains a diverse portfolio of over 2,300 tests. Its diagnostic offerings include 788 routine pathology tests—covering basic biochemistry and hematology—and 647 specialized tests that encompass advanced biochemistry, histopathology, and molecular pathology. In the field of radiology, Suraksha provides 748 basic and intermediate tests such as X-rays, ultrasonography (USG), and CT scans, along with 104 advanced tests like MRI and specialized CT scans. The facilities are equipped with 24 CT scan machines and 13 MRI machines.
From Fiscal Years 2022 to 2024, Suraksha Diagnostic achieved a compounded annual growth rate (CAGR) of 20.87% in revenue. By the end of March 2024, 43 of its diagnostic centers featured 120 polyclinic chambers that accommodated over 750 specialized doctors to enhance patient convenience. The company employed a total of 1,522 permanent staff as of the same date.
Suraksha Diagnostic IPO Analysis: Financial Highlights
Suraksha Diagnostic stands out as one of the most reliable diagnostic firms in India, particularly regarding its financial performance. As illustrated in the table below, the company has consistently achieved top-line growth, with profits rising each year for the past three years, with the exception of FY 2023.
In FY 2024, Suraksha Diagnostic reported a revenue of INR 218.71 crore and profits of INR 23.13 crore. The company has continued to see revenue growth, posting a top-line figure of INR 60.73 crore for the three months ending June 2024. During this same period, profits increased to INR 7.67 crore, as noted in its Red Herring Prospectus (RHP).
| Â | FY 2022 | FY 2023 | FY 2024 | Q1 FY 2025 |
| Revenue | 223.19 | 190.13 | 218.71 | 60.73 |
| Expenses | 197.76 | 186.94 | 190.03 | 51.34 |
| Net income | 20.82 | 6.07 | 23.13 | 7.67 |
| Margin (%) | 9.33 | 3.19 | 10.58 | 12.63 |
These figures reflect a good operational foundation and suggest potential for future growth.
Suraksha Diagnostic IPO Analysis: Comparison With Listed Peers
| Name of Company | FY 2024 Revenue (in INR Cr) | EPS | RoNW (%) | P/E | NAV |
|---|---|---|---|---|---|
| Suraksha Diagnostic | 222.26 | 4.43 | 14.09 | 94.81 – 99.54 | 33.66 |
| Dr Lal PathLabs | 2,226.60 | 42.98 | 20.35 | 77.08 | 20.35 |
| Metropolis Healthcare | 1,207.70 | 24.87 | 12.26 | 89.61 | 12.26 |
| Thyrocare | 572.39 | 13.40 | 13.34 | 65.52 | 13.34 |
| Vijaya Diagnostic | 547.81 | 11.59 | 19.77 | 86.40 | 19.77 |
Here’s a summary of how Suraksha Diagnostic stands against its competitors:
- Return on Net Worth (RoNW): With a RoNW of 14.09%, Suraksha Diagnostic is competitive but trails behind Dr Lal PathLabs (20.35%) and Vijaya Diagnostic (19.77%), suggesting that while it is effective in utilizing its equity, there is room for improvement.
- Price-to-Earnings (P/E) Ratio: The P/E ratio for Suraksha ranges from 94.81 to 99.54, which is higher than that of Dr Lal PathLabs and Metropolis Healthcare, indicating that investors are willing to pay a premium for its earnings relative to its peers.
Suraksha Diagnostic IPO Analysis: Smart Investment or Caution Ahead?
Investing in the Suraksha Diagnostic IPO, scheduled to open on 29 November 2024, requires a nuanced understanding of the company’s financial health, market position, and competitive landscape. The IPO aims to raise INR 846.25 crore through an offer-for-sale of approximately 1.92 crore shares, with a price band set between INR 420 – 441 per share. This pricing suggests a price-to-earnings (P/E) ratio of around 99.54 based on the earnings per share (EPS) of INR 4.43 for FY24.
Suraksha Diagnostic has shown impressive growth metrics, reporting a revenue increase of 14.75% to INR 222.26 crore in FY24 compared to INR 193.69 crore in FY23, alongside a remarkable profit surge of 281%, reaching INR 23.13 crore. The company has achieved a compounded annual growth rate (CAGR) of 20.87% in non-COVID revenues over the past two years, indicating robust demand for its integrated diagnostic services. The operational network includes a central laboratory and numerous diagnostic centers across eastern India, positioning it as a leading player in the region.
Conclusion
The Suraksha Diagnostic IPO might look as an exciting opportunity for investors looking to enter the healthcare sector. With its strong financial performance, strategic market positioning, and commitment to leveraging technology in diagnostics, Suraksha Diagnostic could be a promising addition to your investment portfolio. However, thorough research and consideration of personal investment goals are essential before applying. Investing wisely requires not only understanding the potential rewards but also being aware of the associated risks in this dynamic sector.
