Vijaya Diagnostic soars 11%, hits new high in weak market on strong outlook

Vijaya Diagnostics share price: Analysts at Nuvama Wealth Management maintain a 'buy' rating on the stock with a higher target price of Rs 1,060 per share

Vijaya Diagnostic Centre share price hit a new high of Rs 977.50 on the BSE today, surging 11 per cent in Monday's intraday trade, in an otherwise weak market on healthy outlook. The stock of the healthcare services provider surpassed its previous high of Rs 973.45, touched on September 12, 2024. In the past six months, Vijaya Diagnostic share price has zoomed 54 per cent.

At 02:51 PM, Vijaya Diagnostic share was trading 9 per cent higher at Rs 962.4 as compared to a 1.5 per cent decline in the BSE Sensex.

Vijaya Diagnostic Centre is an integrated diagnostics provider with a high B2C mix that offers pathology and radiology testing services to customers under one roof. Its operational network is spread across southern Indian states of Telangana and Andhra Pradesh, Pune, Kolkata and in the National Capital Region. Its core geographies comprise Hyderabad, rest of Telangana and Andhra Pradesh.

The company, in its FY24 annual report, said that it plans to add 10 new hub centres over the next two years with a particular emphasis on Pune and Eastern India. Vijaya Diagnostic's expansion strategy is backed by a strong financial position, with plans to fund these initiatives through internal accruals and existing cash reserves. 

The management is confident that its strategic initiatives, combined with its commitment to operational excellence, will enable the company to deliver lasting value to its stakeholders. The company said it also plans to explore new opportunities for growth, including potential inorganic acquisitions in high-potential markets. 

Analysts at Nuvama Wealth Management maintain a 'Buy' rating on the stock with a higher target price of Rs 1,060 per share (earlier Rs 955).

"Vijaya's integrated model providing, both radiology and pathology, coupled with high B2C mix and adoption of latest confidence instils greater confidence in its growth potential. Its confidence to grow in double digits in its core Hyderabad market is comforting while its expansion in high growth potential geographies such as Pune and Kolkata should accelerate its growth," according to the brokerage firm.

Analysts believe it is poised to win in new markets given its strong balance sheet, integrated play, high B2C mix, and latest technologies. Moreover, receding pricing pressures bodes well for the overall sector.

"Management is confident of sustaining its mid-teen revenue growth momentum with no compromise on profitability. We reckon Vijaya shall post revenue/PAT compound annual growth rate (CAGR) of ~20 per cent/24 per cent over FY24–27E with healthy RoICs of ~30 per cent-plus despite expansion. Vijaya’s well laid-out expansion plans, superior execution skills, strong cash flows (~Rs 200 crore annual OCFs) and investment in high-end technology provide comfort," the brokerage firm said in its management meeting update.