What you need to know – Vijaya Diagnostic Center Limited IPO
Here is an important thing to know about the IPO of Vijaya Diagnostic Center Limited:
1) The issue: The initial public offer includes an offer to sell a maximum of 35,688,064 participating shares by the selling shareholders. The issue will have a price range of Rs 522 to Rs 531 per share of par value of Re1 each (“Participating Shares”).
2) Largest Integrated Diagnostics Player: The Company is the largest integrated diagnostics chain that combines pathology and radiology services in South India, in terms of operating revenue. It is also one of the fastest growing diagnostic chains in terms of turnover for the 2020 financial year (Source: CRISIL report).
3) Comprehensive service offerings: The Company offers a comprehensive range of approximately 740 routine tests and 870 specialized pathology tests and approximately 220 basic radiology tests and 320 advanced radiology tests which cover a range of specialties and disciplines, as of June 30, 2021.
4) Vast operational network: the Company has built a vast operational network consisting of 81 diagnostic centers and 11 co-located reference laboratories, in 13 towns and villages in the states of Telangana and Andhra Pradesh and in the national capital region. and Kolkata, as of June 30, 2021
5) Growth strategy:
Deepen Penetration and Broaden Customer Base: To deepen its penetration and increase its customer base to consolidate its leadership position in its core market, the plan includes:
o Expand the service network by opening additional diagnostic centers;
o Improve the capacity of its laboratory and its test menu by adding the latest technologies;
o Increase its activity with individual customers by offering a portfolio of additional services;
o Physician engagement through medical awareness initiatives and meetings with practicing physicians; and
o Increased emphasis on prevention and wellness offers.
Expansion of the network: the Company will continue to focus on expanding its network by creating departments and hubs in the existing watershed, adding reference laboratories and increasing its home collection services in the main geographic areas.
Focus on customer-centric service offerings: the company intends to offer additional prevention and wellness services, adopt new cutting-edge diagnostic testing technology, and create customized packages for its customers.
6) Expansion plan: plans to expand its presence in key towns and villages identified in the adjacent geographic areas of Telangana and Andhra Pradesh and in eastern India, particularly Kolkata.
7) Selective Acquisition: The Company plans to complement its organic growth through selective acquisitions / strategic partnerships with brands with a strong vintage and market position in adjacent markets.
8) High brand recall: The company has high brand recall, resulting in high share of individual consumer activity and customer loyalty. The company’s focus on the consumer and, combined with its brand recognition for quality diagnostic services, results in higher brand recall in its key geographies and allows us to have a share high number of walk-in clients.
9) Strong Technical Capabilities: The company has strong technical capabilities, quality infrastructure and advanced medical technology with strong IT infrastructure.
· The operations of the diagnostic center are supported by a centralized front-end IT platform.
As of June 30, 2021, the company’s radiological testing operations are supported by radiology equipment comprising 15 CT machines, 18 MRI machines and five PET CT / Gamma machines, and a team of 105 radiologists in the centers of diagnostic
10) Strong Industry Growth Prospects: According to CRISIL report, India diagnostics market is expected to grow at a CAGR of around 12% to 13% to reach around Rs. 920 billion to Rs. 980 billion by l ‘fiscal year 2023 from Rs. 710 billion to Rs. 730 billion in fiscal year 2021
· The diagnostics market in Telangana and Andhra Pradesh, the states in which the company has a significant presence, is expected to reach around Rs. 120 billion currently to Rs. 130 billion by fiscal year 2023.
The main drivers of the Indian diagnostics market include (i) increasing health awareness and disposable income, (ii) increasing demand for better health facilities as well as quality of care of individuals , and (iii) increased expenditure on prevention and well-being.
11) Robust financial performance: As of June 30, 2021, the company recorded total income of Rs. 125.97 crore. For fiscal year 2021, the company’s total income was Rs. 388.59 crore.
The company’s OPBDIT margin ranked second among other major diagnostic players during fiscal year 2021
For fiscal 2020, the average test per customer was 2.8, operating revenue per customer was Rs. 1214 and OPBDIT per customer was Rs. 475 which is higher than the peers listed according to the CRISIL report.
· For fiscal year 2021, the company’s RONW was 23.64% and the ROCE (before cash) was 42%.