Vijaya Diagnostic Center's Rs 1,895.04 crore initial public offering (IPO) failed to get much attention from investors today as it was subscribed only 0.47 times or 47 per cent on its second of its issue, according to subscription data on the stock exchanges. The diagnostic chain's IPO opened for bidding on Wednesday, September 1, and will close tomorrow, September 3, remaining open for investors for a period of three days. For the issue, the company has fixed the price band at Rs 522 - Rs 531 per share.
On Thursday, the portion reserved for the retail individual investors was subscribed 0.74 times - the highest among the three groups of investors. The portion set aside for the qualified institutional buyers or QIB was subscribed 0.32 times, while the portion reserved for non-institutional investors or NII was undersubscribed at 0.05 times.
Incorporated in 1981, Vijaya Diagnostic is the largest and fastest-growing diagnostic chain in South India. The company offers pathology and radiology testing services, as well as customized health and wellness packages for customers. Vijaya Diagnostic will not receive any funds from the public offer as it is entirely an offer for sale.
''As it is a complete Offer for Sale, Vijaya Diagnostics will not get any proceeds from the issue. Further, the company has a huge concentration catering to just 2 states in South India. The competition has increased as many players are getting into this business post covid pandemic.
At the higher end of the price band, Vijaya Diagnostic Centre IPO is priced at a P/E ratio of ~64 times FY21 EPS (on a fully diluted on post-issue basis). This is lower compared to listed peers Dr Lal Path Labs (110 times), and Metropolis Healthcare (81 times). The company's return ratios are in-line with its peers.
Given factors such as lacklustre growth in topline and bottomline, stable margins and return ratios, concentration risk and expensive valuations, we remain “Neutral” on the prospects of this issue," SEBI-registered investment advisor said in a report.