Vijaya Diagnostic Centre’s initial public offering (IPO) opened for subscription on Wednesday. Investors will be able to subscribe to the public issue of the fast-growing diagnostic chain for three days as the public issue closes on Friday.

Vijaya Diagnostic Centre’s Rs 1,895 crore IPO is entirely an offer-for-sale (OFS) of 35,688,064 equity shares by promoter Dr S Surendranath Reddy and investors Karakoram Limited and Kedaara Capital Alternative Investment Fund — Kedara Capital AIF 1.

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KEY DETAILS ABOUT THE IPO

The company has fixed the price band of the IPO at Rs 522-Rs 531 per share with a face value of Rs 1 each. The public issue will have a minimum lot size of 28 shares at Rs 14,868 and a maximum size of 364 shares at Rs 1,93,284.

Of the total issue, 35 per cent has been reserved for retail investors while 50 per cent has been reserved for qualified institutional buyers (QIBs) and the remaining 15 per cent has been set aside for non-institutional investors.

Vijaya Diagnostic Centre said on Tuesday that it has raised a little over Rs 566 crore from anchor investors ahead of its IPO opening. Fidelity Management Research, Fidelity Investments, Aberdeen, Abu Dhabi Investment Authority, Kuwait Investment Authority and Government Pension Fund Global are some prominent anchor investors.

Share allotment will be finalised on September 8 and refunds will be issued to ineligible applicants a day later. Shares will be credited to the Demat accounts of eligible investors on September 13 and the IPO will list on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on September 14.

Reports suggest that the Vijaya Diagnostic Centre’s shares were trading at a premium of Rs 20 on the grey market, which unlisted shares of a company trade before being listed on the stock market. Some market observes said the high valuation and 100 per cent OFS could be reasons behind the low GMP.

Vijaya Diagnostic Centre, backed by Kedaara Capital, is a fast-growing diagnostic chain that offers pathology and radiology testing services to customers through its extensive network. It consists of 80 diagnostic centres and 11 reference laboratories across 13 cities and towns in Telangana, Andhra Pradesh, National Capital Region and Kolkata.

The company had posted a net profit of nearly Rs 85 crore in the year ended March 2021, compared to 62.5 crore inthe previous financial year. The company’s total income and revenue also rose.

SHOULD YOU SUBSCRIBE?

Although the company enjoys healthy financials, analysts indicate that the IPO’s valuation is expensive and leaves a limited upside for investors.

Angel Broking analysts said they maintain a ‘neutral’ outlook for the Vijaya Diagnostic Centre IPO as the IPO’s price band of Rs 531 seems to be higher in comparison to recently listed peers.

Analysts from different brokerages suggest that the IPO is priced at a price to earnings (PE) of 64.3 times and is on the higher side. Some analysts say that the recent weakening of sentiments in the primary market could also spoil proceedings.

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