The IPO of Suraksha Diagnostics, a company providing pathology and radiology testing services, is open for subscription. It has been subscribed 7%. However, there is no movement in the grey market regarding this. Bidding has been done in this IPO till December 3. The company has fixed a price band of Rs 420 to Rs 441 per share for its Rs 846 crore IPO. The company’s stock will be listed on the stock market on December 6, 2024.

The offer for sale includes

Suraksha Diagnostic’s IPO is entirely an offer for sale, in which 1.92 crore shares will be sold. The promoters selling shares include Somnath Chatterjee, Ritu Mittal and Satish Kumar. Orbimed Asia, Mauritius Limited, Munna Lal Kejriwal and Santosh Kumar Kejriwal are the investors selling their stake in the company. Suraksha Diagnostic has raised Rs 253.87 crore from anchor investors before the IPO. The company has allotted 57 lakh shares to 16 anchor investors at Rs 441 per share.

Avoid rating on Suraksha Diagnostics IPO

Brokerage house Swastika Investment has given an avoid rating on the IPO of Suraksha Diagnostics. The brokerage says that the financial performance of the company is not consistent. Despite the recent signs of improvement in this, the company’s performance in this regard will not be good in 2023. The valuation is also aggressively high. Investors may get better opportunities in other listed companies in this sector.

Brokerage gave subscribe rating

The brokerage has given a subscribe rating to Suraksha Diagnostics IPO. It says that the company is one of the major players in the medical diagnostic industry in East India. The demand for quality health diagnostics with home collection facility for the elderly and sick makes companies like SDL a preferred choice among patients. A well-built medical infrastructure coupled with qualified health professionals earns the trust of its customers.

The brokerage said

He said that at the upper price band, the company is valued at 99.3 times its FY24 earnings and 75.0 times its annualized FY25 earnings. After the issue of equity shares, the market cap of the company is Rs 2296.76 crore,

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Whose market cap to sales ratio is 10.5x based on FY24 earnings. The company’s operations are limited to eastern India, which has limited market reach. The issue valuation is also high.

company financials

Suraksha Diagnostics’ revenue growth has remained almost stable for a few years. The company’s margin has increased from 28% in FY22 to 32% in FY24. The company’s net profit has grown at a CAGR of 5.4% from FY22-24. The company saw a decline in revenue and profit in FY23. According to the company’s red herring prospectus, the profitability of diagnostic centers across India declined in FY23 and remained range bound in FY24. The company has 8 satellite laboratories and a central laboratory with 215 customer touchpoints. This includes 49 diagnostic centers and 166 sample collection centers by June 2024.