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Anand Rathi Report
Suraksha Diagnostic Ltd. will launch its initial public offering on November 29 and the offer closes for subscription on December 03. The diagnostic chain company has set the price band in the range of Rs 420–441 per share. The Rs 846.25 crore IPO consists entirely of an offer for sale of 1.92 crore shares with no component of fresh issue. The minimum lot size for bidding is 34 shares, and then in multiples thereof.
Valuation & outlook
Suraksha Diagnostic is a diagnostic chain in eastern India is well positioned to capitalize on the growth opportunities for organized diagnostic chains in the diagnostic services markets of eastern and northeastern India. They have established a comprehensive operational network spanning the states of West Bengal, Bihar, Assam, and Meghalaya.
As of June 30, 2024, the company offers a diverse range of over 2,300 tests encompassing multiple specialties and disciplines. The company aims to enhance its presence in its operating regions, with a particular focus on Kolkata. Most of its diagnostic centers are situated in urban areas of Kolkata.
In addition to focusing on their core geography, the company plans to expand and strengthen its presence in neighboring regions of eastern and northeastern India.
At the upper band company is valuing at 99.3 times its FY24 earnings along with being valued at 75.0 times if we annualize FY25 earnings. Following the issuance of equity shares, the company's market capitalization stands at Rs 22,967.6 million, with a market cap-to-sales ratio of 10.5 based on its FY24 earnings.
The diagnostic sector in which the company operates is highly competitive. Moreover, the company's operations are confined to the eastern part of India, limiting the scope of its market. We believe that the issue is richly priced and recommend “Avoid” rating to the IPO.
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