Krsnaa Diagnostics IPO Opens Tomorrow: Key Points to Consider

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  • Aug 3, 2021 - Krsnaa Diagnostics IPO Opens Tomorrow: Key Points to Consider

Krsnaa Diagnostics IPO Opens Tomorrow: Key Points to Consider

Aug 3, 2021

Krsnaa Diagnostics initial public offering (IPO) is going to open for subscription on 4 August 2021 and will remain open for bidding till 6 August 2021.

It's one of the fastest-growing diagnostic chains in India. It has fixed price band at Rs 933 to Rs 954 per equity share.

The company is eyeing an issue size of Rs 12.1 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.

Krsnaa Diagnostics IPO Details

Issue Type Book Built Issue IPO
Face Value Rs 5 per equity share
IPO Price Rs 933 to Rs 954 per equity share
Market Lot 1 lot - 15 shares
Issue Size Rs 12.1 bn
Fresh Issue Rs 4 bn
Offer for Sale Rs 8.1 bn
Basis of Allotment Date Wednesday, 11 August 2021
IPO Listing Date Tuesday, 17 August 2021
Data Source: Company's Red Herring Prospectus

The IPO will consist of a fresh issue of Rs 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% in the company.

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.

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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 Rs 200 m worth of shares for employees, who will get a discount of Rs 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.

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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 Rs 2.7 bn.

This is an upward trend from its previous year's Rs 2.1 bn. The company's net loss also went up to Rs 1.1 bn from the previous year's Rs 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 Rs 2 bn and the revenue was Rs 5.6 bn. This came in light of a sharp decrease in expenditures and higher revenue from operations due to the ongoing pandemic.

Key Parameters

(Rs m) FY18 FY19 FY20 Dec-20
Revenues 1,075.7 2,092.4 2,584.3 3,005.4
Revenue Growth (%)   95% 24%  
Expenses 1,947.4 2,920.4 4,297.1 2,870.9
Profit Before Tax (PBT) 842.8 -777.3 -1,583.3 2,756.1
Net Profit -601.6 -580.6 -1,119.5 1,959.3
Data Source: Company's Red Herring Prospectus (RHP)

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.

For more details, check out Krsnaa Diagnostics' Red Herring Prospectus.

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Comparison with listed peers

As per the offer documents, Krsnaa Diagnostics has shown Metropolis Healthcare and Dr Lal Pathlabs as its listed peers.

Company Revenues Net Profit Return on Net Worth (%)
Metropolis Healthcare 8.6 1.3 24%
Dr Lal Pathlabs 13.3 2.3 21.9%
Krsnaa Diagnostics 2.6 -1.1 -56.8%
Data Source: RHP, Equitymaster
Figures in Rs bn and as on 31 March 2020

Krsnaa Diagnostics grey market premium?

Shares of the diagnostic company is available at a premium of Rs 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 Rs 440 indicates that market is expecting listing of the public issue at around Rs 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 Rs 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!

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Sep 27, 2021 03:37 PM