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IPO analysis: Krsnaa Diagnostics Ltd

Abhinav Lahoti
/ Categories: IPO Analysis
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IPO analysis: Krsnaa Diagnostics Ltd

IPO rating: Invest for long-term  

About the issue:  

Krsnaa Diagnostics Ltd is one of the fastest-growing diagnostic chains in India. The company is coming out with its initial public offering (IPO) of equity shares with a face value of Rs 5 per equity share. The issue size of the company is Rs 1,213.33 crore with a fresh issue comprising Rs 400 crore while the remaining include the sale of shares worth Rs 813.33 crore by existing investors, according to its red herring prospectus. The price band of the issue has been fixed at Rs 933 to Rs 954 per equity share. The IPO opening date is August 04, 2021, while it will be closing on August 06, 2021. The issue will be listed on the exchange on August 17, 2021. The IPO market lot size is 15 shares. A retail-individual investor can apply up to a maximum of 13 lots (195 shares or Rs 1,86,030). The net proceeds generated from the IPO will be utilised towards financing the cost to establish diagnostics centres in Punjab, Karnataka, Himachal Pradesh & Maharashtra, repayment/pre-payment of firm's borrowings fully or partially as well as for other general corporate purposes.  

Krsnaa Diagnostics IPO details:

IPO opening date  

August 4, 2021  

IPO closing date  

August 6, 2021  

Issue type  

Book built issue IPO  

Face value  

Rs 5 per equity share  

IPO price  

Rs 933 to Rs 954 per equity share  

Market lot  

15 shares  

Min. order quantity  

15 shares  

Listing at  

BSE & NSE  

Issue size  

[.] equity shares of Rs 5
(aggregating up to Rs 1,213.33 crore)  

Fresh Issue  

[.] equity shares of Rs 5
(aggregating up to Rs 400.00 crore)  

Offer for Sale  

8,525,520 equity shares of Rs 5
(aggregating up to Rs 813.33 crore)  

  

About the company:  

Krsnaa Diagnostics Ltd offers a wide range of diagnostic services such as imaging/radiology services (X-rays, MRI, etc.), routine clinical laboratory tests, pathology, and teleradiology services to private as well as public hospitals, medical colleges, and community health centres.  

The firm has an extensive network of diagnostic centres across the country with a key focus on non-metro, and lower-tier cities as well as towns. As of December 31, 2020, it operated 1,801 diagnostic centres, which offered radiology and pathology services across 13 different cities in India. In the fiscal year 2020, the business has served more than 5.27 million patients. It focusses on the public-private partnership (PPP) diagnostics segment and have the largest presence in the diagnostic PPP segment. Its PPP agreements are typically long-term in nature, which ensures predictability of its revenues from operations. In addition to the PPP segment, the company has been growing its collaboration with private healthcare providers to operate diagnostic centres within their own facilities and have thus, expanded from operating 12 diagnostic centres as of 2018 to 17 diagnostic centres as of March 2020 and 20 such diagnostic centres as of December 31, 2020.  

Competitive strengths:  

  • Differentiated diagnostic service provider company in India.  
  • A comprehensive range of diagnostic services i.e. imaging, pathology, etc.  
  • Strong brand equity with quality healthcare services at lower prices than the market.  
  • Extensive market footprint in 13 states across India.  
  • Consistent financial performance track record.  

 

Financials:  

The company recorded a EPS in 2020-2021 at Rs 71.86 from a loss of Rs 43.53 in the preceding year.

Summary of financial information (restated consolidated)   

Particulars  

For the year/period ended (Rs in crore)  

 

31-Mar-21  

31-Mar-20  

31-Mar-19  

   

Total assets  

604.53  

629.98  

528.98  

   

Total revenue  

661.47  

271.37  

214.31  

   

Profit after tax  

184.92  

(111.95)  

(58.05)  

   

  

Recommendation:  

It is the fastest-growing diagnostic chain in India on multiple parameters including operating income, operating profit before depreciation, interest & tax (OPBDIT) and profit after tax between the fiscal year 2017-2020 along with the volume of tests conducted between the fiscal year 2018-2020 (amongst players with revenues exceeding Rs 150 crore). The company provides quality and inclusive diagnostic services at affordable rates across various segments. Since its inception, it has served more than 1.3 crore customersIt also operates one of India’s largest teleradiology reporting hubs in Pune (Maharashtra), which is able to process large volumes of X-rays, CT scans and MRI scans round the clock and 365 days a year. It offers its diagnostics at competitive rates and significantly lower than the other major players in the market. Its radiology and pathology tests are priced 45-60 per cent and 40-80 per cent, respectively, below the market rates. It has a strong team of 121 radiologists, 33 pathologists, 7 microbiologists and more than 2,300 qualified professionals including clinicians, technicians & operators. Its diagnostic equipment is procured from leading OEMs including Wipro GE Healthcare Private Limited, Siemens Healthcare Private Limited, Fujifilm India Private Limited, HORIBA India Private Limited and Agappe Diagnostics Limited. The PPP segment of healthcare services is a large target market, representing a market opportunity of Rs 9,500 crore – Rs 10,000 crore in the fiscal year 2021. Going forward, this market is expected to grow at a CAGR of 14 per cent and 17 per cent between fiscal 2021 and 2023 to reach Rs12,500 crore and Rs 13,500 crore on back of higher government spending in the PPP segment. Owing to the above reasons, one should invest in the stock IPO for the long term. 

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