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ICICI Securities Report
Vijaya Diagnostic Centre Ltd. has acquired 100% stake in Pune-based PH Diagnostic Centre Pvt Ltd. for a cash consideration of Rs 1,475 million (including Rs 128 million for debt repayment).
The business dynamics of PH Diagnostic are identical to Vijaya and can be swiftly integrated. Besides, PH's ability of high end testing pertaining to allergy and genomic may also add new capabilities to the combined portfolio.
The acquisition also addresses concerns on replicating Vijaya's business model beyond Andhra/Telangana region as the share of these regions may come down to 89% in FY25E vs ~97% currently.
We raise our Ebitda for FY24/25E by 2-8% to factor in this acquisition. The stock trades expensive at 21.8 times FY25E enterprise value/Ebitda, we retain our 'Reduce' recommendation. However, we raise target price to Rs 590.
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