Krsnaa Diagnostics lists at 7% premium over issue price on BSE

Krsnaa Diagnostics (KDL) made a decent debut on the bourses with the shares of the company getting listed at Rs 1,025, a 7.4 per cent premium against issue price of Rs 954 per share on the BSE. On the National Stock Exchange (NSE), the stock of healthcare services company opened at Rs 1,006, a 5.5 per cent higher against its issue price.

At 10:07 am; the stock was quoting at Rs 1,085.45, up 14 per cent higher against issue price. It hit a high of Rs 1,099.50 and low of Rs 961.45 on the BSE so far. A combined 3.6 million equity shares changed hands on the counter on the NSE and BSE.

The initial public offer (IPO) of KDL got a strong response from the investors as the issue got subscribed 64.38 times. The qualified institutional buyers (QIBs) portion was subscribed 49.83 times, the non institutional investors (NII) or wealthy investor portion was subscribed 116.30 times, and the retail portion was subscribed 41.95 times.

KDL offers a range of technology-enabled diagnostic services such as imaging (including radiology), pathology/clinical laboratory and tele-radiology services to public and private hospitals, medical colleges, and community health centres pan-India.  The company also offers a range of diagnostics imaging services and clinical laboratory tests that include both routine and specialized tests / studies and profiles, which are used for prediction, early detection, diagnostic screening, confirmation, and monitoring of diseases.

Between FY18-21, KDL’s revenues grew at CAGR of 54 per cent while Ebitda (earnings before interest, taxes, depreciation, and amortization) grew by 50 per cent. The company is consistently earning margins in the range of 23-27 per cent. The PPP segment of healthcare services is a large target market, representing a huge market opportunity. Going forward, this market is expected to grow at a CAGR of 14-17 per cent between FY21-FY23 on the back of higher government spending in the PPP segment, the brokerage firm Nirmal Bang Securities had said in IPO note.

A substantial portion of the revenue from operations depends on payments under contracts with public health agencies. If KDL is unable to negotiate and retain similar fee arrangements, if the contracts are cancelled, or if it is unable to realize payments due to it, its business may be materially and adversely affected. Most of KDL’ diagnostic centres have been established and are operated under public private partnership contracts awarded by government agencies through a competitive bidding process. There can be no assurance that KDL will qualify for, or that it will successfully compete and win such tenders, are among key concerns according to HDFC Securities.