Krsnaa Diagnostics IPO opens 4 August: key points to consider
Premium- Krsnaa Diagnostics grey market premium is at around ₹440 compared with its issue price of ₹933-954 apiece
Krsnaa Diagnostics' initial public offering (IPO) will open for subscription on 4 August and will close on till 6 August.
Among the fastest-growing diagnostic chains in India, Krsnaa Diagnostics has fixed the price band of its IPO at Rs933-954 per share.
The company is eyeing an issue size of Rs12.1 bn at the upper end of the price band.
Krsnaa Diagnostics IPO will be among four public issues to open on 4 August along with Devyani International, Windlas Biotech, and Exxaro Tiles.
JM Financial, DAM Capital Advisors, Equirus Capital, and IIFL Securities are the book running lead managers to the issue.
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The IPO will consist of a fresh issue of ₹4 bn and an offer for sale of up to 8.53 m shares by its existing promoters and shareholders.
Rajendra Mutha is the promoter of the company and holds a 29.53% stake in the company.
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The offer for sale (OFS) comprises sale of 1.6 m shares by PHI Capital Trust-PHI Capital Growth Fund-I, up to 3.3 m shares by Kitara PIIN 1104, up to 3.6 m shares by Somerset Indus Healthcare Fund I and up to 21,380 shares by Lotus Management Solutions.
Category-wise reserved portion
As far as investor portions go, the IPO has given qualified institutional buyers (QIBs) a reservation of 75%.
The non-institutional investors (NIIs) have a reservation of 15% while the retail investors have a 10% allocation.
The offer also includes a reservation of ₹200 m worth of shares for employees, who will get a discount of ₹93 per share to the final issue price.
Objects of the issue
The company aims to use the proceeds of the public issue to finance the cost of establishing new diagnostics centres in Punjab, Karnataka, Himachal Pradesh, and Maharashtra.
A certain portion of the funds will go towards the repayment and pre-payment of the company’s borrowings either fully or partially.
Lastly, a portion of the proceeds will go towards other general corporate expenses.
About Krsnaa Diagnostics
Incorporated in 2010, Krsnaa Diagnostics is one of the fastest-growing diagnostic chains in India.
The company offers a wide range of diagnostic services such as imaging or radiology services (X-rays, MRI, etc), routine clinical laboratory tests, pathology, and tele-radiology services to private and public hospitals, medical colleges, and community health centres.
The firm has an extensive network of diagnostic centres across India with a key focus on non-metro, and lower tier cities and towns.
As of 31 December 2020, it operates 1,801 diagnostic centres that are offering radiology and pathology services across 13 different cities in India. In fiscal 2020, the business has served 5.3 m patients.
Competitive strengths
Krsnaa Diagnostics has some notable competitive strengths. For one, it’s one of the leading diagnostic chains in India.
It also has a comprehensive and diverse range of services in the field of diagnostics. It has an extensive market footprint thanks to its intricate network and presence in 13 cities.
The company has also shown a good financial track record.
Financial snapshot of the company
The company’s income for the fiscal year ended 3 March 2020, was ₹2.7 bn.
This is an upward trend from its previous year’s ₹2.1 bn. The company’s net loss also went up to ₹1.1 bn from the previous year’s ₹580.5 m.
With that in mind, it’s notable that Krsnaa Diagnostics did record an increase in net profit and revenue for the nine-month period ended 31 December 2020.
The net profit for this period was ₹2 bn and the revenue was ₹5.6 bn. This came in light of a sharp decrease in expenditures and higher revenue from operations due to the ongoing pandemic.
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The company has not declared any dividend so far. It will follow a prudent dividend policy post listings based on its financial performance and future prospects.
Comparison with listed peers
As per the offer documents, Krsnaa Diagnostics has shown Metropolis Healthcare and Dr Lal Pathlabs as its listed peers.
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Krsnaa Diagnostics grey market premium
Shares of the diagnostic company is available at a premium of ₹440 in the grey market today.
That means the market is expecting more than 46% listing gain from the public issue before it becomes open for subscription on 4th August.
They went on to add that Krsnaa Diagnostics IPO grey market premium today at ₹440 indicates that market is expecting listing of the public issue at around ₹1,394 (issue price + GMP).
According to market observers, the public offer will remain volatile as issue opening date is fast approaching.
It’s raining IPOs! What should you do?
28 companies have already concluded their IPOs, raising over ₹420 bn over the last seven months. 34 others have filed their offer documents with market regulator for approval.
Besides, there are over 50 more lined up with their IPOs this year. Prominent names include new-age technology based companies such as PhonePe, MobiKwik, Grofers, PolicyBazaar, and Delhivery among others.
Retail investors are showing huge anticipation for IPOs and for good reason. IPOs of Zomato and Tatva Chintan Pharma took less than two weeks to double investors' money.
As companies line up to raise funds from the market amid high valuations, investors need to consider numerous factors before investing their money in an IPO.
If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.
Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.
Happy Investing!
(This article is syndicated from Equitymaster.com)
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