Vijaya Diagnostic off to quiet start, lists at 2% premium over issue price

The stock began trading around Rs 540-odd level as against the issue price of Rs 531 per share but soon surged to a high of Rs 588 on the BSE

Lab testing

Shares of Vijaya Diagnostic Centre made a quiet debut as the stock opened at Rs 542.30, 2 per cent higher against the issue price of Rs 531 per share on the BSE. On the National Stock Exchange (NSE), it opened at Rs 540.

However, post listing, the stock soon jumped to a high of 588, 11 per cent premium over its issue price on the BSE. At 10:11 am, it traded at Rs 573.90. Around 7 million equity shares had changed hands at the counter on the NSE and BSE so far.

The initial public offering (IPO) of Vijaya Diagnostic Centre was subscribed 4.54 times, mainly due to strong response from the qualified institutional buyers (QIBs). QIBs category was subscribed 13.07 times, while non-institutional investors and Retail Individual Investors (RIIs) were subscribed by 1.32 times and 1.09 times, respectively.

Vijaya Diagnostic is the largest integrated diagnostic chain in southern India, offering pathology and radiology testing services mostly in Telangana and Andhra Pradesh. The objective of the IPO, according to the company, is to enhance its visibility and brand image, provide liquidity to shareholders and a public market for the shares.

Vijaya Diagnostic offers a one-stop solution for pathology and radiology testing services to customers through an extensive operational network, which consists of 81 diagnostic centres and 11 reference laboratories across 13 cities and towns in Telangana, Andhra Pradesh, the National Capital Region and Kolkata as on June 30, 2021.

According to the Crisil Report, the Indian diagnostics market was valued at around Rs 71,000-73,000 crore in FY21, and is projected to grow at a CAGR of 12-13 per cent to Rs 92,000-98,000 crore by FY23, driven by a rise in health awareness and disposable incomes, increase in demand for better healthcare facilities and quality of care of individuals, and increase in spending on preventive and wellness. Further, according to Crisil Report, the diagnostics market in Telangana and Andhra Pradesh, where Vijaya has a significant presence, is projected to grow to Rs 12,000-13,000 crore by FY23.

Since Vijaya primarily derives almost all of its revenues from walk-in customers, the company’s brand and reputation are critical to the success of the business and operations. Vijaya’s ability to maintain and improve the brand name and brand image is dependent on factors such as quality, accuracy and efficiency of the diagnostic tests, turnaround time and patient satisfaction, the performance of company’s service network, the introduction of new tests and services, ICICI Securities said in IPO note.

Further, as Vijaya expands into new geographic markets within India, and as the market becomes increasingly competitive, maintaining and enhancing the brand may become costly and difficult, the brokerage firm said.