The initial public offer (IPO) of Krsnaa Diagnostics will open for subscription today. The subscription will begin in the price band of Rs 933-954 per equity share.
The issue comprises a fresh issue of shares worth Rs 400 crore and an offer for sale (OFS) of shares worth Rs 813.3 crore.
Krsnaa Diagnostics is one of the largest differentiated diagnostic service providers in the country. Its range of services includes imaging, pathology/clinical labs, and teleradiology services. The domestic lab chain offers services to the public, private hospitals, community health centres, and medical colleges.
Its OFS consists of a sale of 16 lakh shares by PHI Capital Trust-PHI Capital Growth Fund-I, 33 lakh shares by Kitara PIIN 1104, 35 lakh shares by Somerset Indus Healthcare Fund I, and 21,380 by Lotus Management Solutions (acting through Mayur Sirdesai).
Of the total issue, retail investors can bid for 10 percent of the net offer and non-institutional and qualified institutional buyers can bid for 15 and 75 percent of the issue, respectively.
Shares worth Rs 20 crore are reserved for the employees who will get a discount of Rs 93 per share on the final issue price.
The company aims to use the proceeds from the IPO to finance the cost of diagnostics centres in Punjab, Karnataka, Himachal Pradesh, and Maharashtra. A portion of the proceeds will also go towards general corporate expenses and a separate portion will be used to repay the borrowings from lenders.
Most brokerages have recommended a 'subscribe' rating for the IPO on the backs of strong operations and financials.
The company has strong business operations, which are reflected in its financials, the brokerage said. "It has exhibited a strong CAGR on sales front over FY19-21, predominantly led by volumes and partially on the back of pricing," it said.
It has demonstrated consistent growth in terms of adjusted EBITDA and revenue. It had reported a profit of Rs 184.93 crore in FY21 against a loss of Rs 111.95 crore in FY20. Its net revenue from operations increased at an annual rate of 37.65 percent during FY19-21.
Further, the brokerage said, on FY21 earnings basis, the company is trading below the industry average of 85.99x.
"We believe that strong balance sheet position, and healthy operating cash flows will enable them to pursue growth opportunities and also fund their strategic initiatives," the brokerage said.
It recommends a 'subscribe' on the issue.
Krsnaa is well placed to benefit from growing industry trends on the back of its scale, strong brand equity, and extensive footprints across India, the brokerage said in a note.
Its financial position has been healthy. This combined with its PPP agreements and plans to expand its network of centres gives it promising growth prospects, it said.
"With promising industry growth prospects coupled with company's strong execution track record, we have a positive on the company for a long term," it said.
First Published: IST