KRSNAA Diagnostics IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

KRSNAA IPO– Incorporated in 2011, Krsnaa Diagnostics Ltd or “KDL” is one of the fastest-growing diagnostic chains in India..

Business — offers a wide range of diagnostic services such as imaging/radiology services (X-rays, MRI), routine clinical laboratory tests, pathology, and tele-radiology services to private/public hospitals, medical colleges, and community health centres.It currently operates 1,823 diagnostic centres that are offering radiology and pathology services across 13 different cities in India.

Region of operation — Key focus on Non metro cities and lower tier towns

Offer purpose — The IPO is issuance of shares worth ₹1213 crore to Finance the cost of establishing diagnostics centres at Punjab, Karnataka, Himachal Pradesh and Maharashtra; debt clearance and general corporate purposes.

Risks —

KDL generates nearly two-thirds of revenues under PPP model, increasing its dependence on payments under contracts with public health agencies.

Pricing dependent on recommended or mandatory fees fixed under the terms of the agreements

High and intense competition

Strength

Rentals are limited and marketing spends are low, with captive customers ensuring high growth
Fastest growing diagnostic chain in India on multiple parameters
Company’s PPP agreements are typically long-term in nature, enabling higher revenue visibility
Extensive network of integrated diagnostic centres across India

Future

The Indian diagnostic industry has grown consistently over the past 3 fiscals and is projected to grow at a CAGR of ~15% over next few yearsAdditionally, the PPP segment of healthcare services is large on the back of higher government spending in the PPP segment.

Valuations

Valuations are high and comparable to peers

Should we apply?

People can subscribe for long term

Expecting good listing gains.

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