Suraksha Diagnostic Ltd.'s initial public offering is scheduled to open on Friday. The IPO consists entirely of an offer for sale of 1.92 crore shares.
The price band for the IPO has been set in the range of Rs 420–441 per share.
The promoters selling their shares 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 their stake in the company.
Issue Details
Issue opens: Nov. 29.
Issue closes: Dec. 3.
Issue price: Rs 420–441.
Offer for sale: Rs 846.25 crore.
Fresh issue: nil
Total issue size: Rs 846.25 crore.
Lot size: Minimum 34 shares, and then in multiples thereof.
Use Of Proceeds
Since the Suraksha Diagnostic IPO is entirely an OFS issue, proceeds from the offer will go directly to the selling shareholders.
Business
Incorporated in 2005, Suraksha Diagnostic is a diagnostic chain in Eastern India, providing a wide range of medical testing services like pathology, radiology testing and medical consultancy services.
The company has a central reference laboratory with eight satellite laboratories and 215 customer touchpoints. This includes 49 diagnostic centres, and 166 sample collection centers as of June 2024. The company has its presence spread across West Bengal, Bihar, Assam, and Meghalaya. As of fiscal 2024, the market share of the company in its major market in the eastern part of the country stood at 1.15–1.30%.
In FY24, the diagnostic company conducted around 5.98 million tests which served 1.14 million patients.
Financial Performance
While Suraksha Diagnostic's revenue growth over the past few years has remained muted, the company's margins have expanded from 28% in fiscal 2022 to 32% in fiscal 2024. The company's net profit has grown at a 5.4% compounded annual growth rate over FY22-24.
The company did see a substantial decrease in revenues and profits in FY23. However, this was in line with overall industry performance. As per the company's red herring prospectus, profitability of diagnostic centres across India contracted in FY23, and remained range bound in FY24 due to higher investment in digitisation and direct acquisition of customers.
Future Growth Strategies
Strengthen position in core geography—Kolkata and the rest of West Bengal.
Expand beyond core markets in adjacent geographies of eastern and north-eastern India.
Supplement organic growth with selective acquisitions.
Leverage technology to elevate customer experience.
Augment medical consultation services offered via polyclinic chambers to boost revenues.
Enhance revenue by inking business-to-business and corporate partnerships.
Key Risks
Very high revenue generation dependence on West Bengal.
Company operates in a highly competitive industry that results in a lower market share.
Company is subject to various operational, medical and legal claims, regulatory actions and any claims of malpractice and medical negligence could impact the business.
The company generates over 90% of its revenue from the B2C segment. Any loss of customers could impact the financials of the company.
Suraksha Diagnostic IPO GMP
The grey market premium of Suraksha Diagnostic IPO was nil as of 09:24 a.m. on Nov. 28, according to InvestorGain. This implies shares of the company will likely list at Rs 441 apiece.
Notably, GMP or grey market price is not an official price quote for the stock and is based on speculation.
Also Read: Stock Market Today: Sensex Closes Over 1,000 Points Lower; Nifty Falls 1.30% On F&O Expiry Day
Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read red herring prospectus thoroughly before placing bids
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