Krishna Diagnostics Limited It opened its Initial Public Offering (IPO) on 4th August and witnessed good response from investors. The issue was subscribed a total of 1.98 times on the first day of bidding till around 17:00 IST on 4 August. Krishna Diagnostics IPO Bids were received for 1.41 crore equity shares against an offer size of 71.12 lakh equity shares, as per subscription data on the exchange. The issue size of the company has been reduced to 71.12 lakh shares from the earlier 1.27 crore equity shares. This comes after the company managed to raise Rs 537 crore a day earlier from anchor investors. IPO Opened on 3 August.
Among all investor categories, retail investors saw the highest subscription to the issue. The retail investor had subscribed a total of 9.59 times to the issue as against his reserve share. Qualified Institutional Buyers (QIBs), on the other hand, had subscribed 0.48 times. Non-institutional investors (NIIs) had subscribed 0.15 times their reserves. In the IPO, the employees subscribed to the issue at 0.21 times the reserve amount.
These subscription numbers come up against the reserved investor share which is as follows – the retail segment had the smallest reservation at 10 per cent, while QIBs and NIIs had 75 per cent allocation and 15 per cent reservation respectively.
The issue size of Krishna Diagnostics is Rs 1,213.33 crore and the fresh issue is Rs 400 crore. This also includes the Offer for Sale (OFS), which aggregates up to Rs 813.33 crore with 8,525,520 equity shares with a face value of Rs 5 per equity share. The shares under the OFS include the shareholding of PHI Capital Trust, Kitara and Somerset Indus Healthcare Fund. The price band of the issue is Rs 933 to Rs 954 per equity share.
The Gray Market Premium (GMP) for the issue was Rs 450 at around 08:25 IST on August 5. This indicated that the shares were trading at Rs 1,383 to Rs 1,404 per equity share in the unlisted market.
Speaking on the financial position of Krishna Diagnostics, Geojit said in a note, “The revenue from service sales to public health agencies in the PPP model accounted for 67 per cent of the total revenue from operations in FY21, while the rest were non-government customers (33). Percentage) such as private medical colleges, private laboratories etc. Net revenue from operations grew at a CAGR of 37.6 per cent from Rs 209.2 crore in FY19 to Rs 396.5 crore, with 41% revenue from radiology services and 59 per cent from Rs. The percentage was pathology in FY21.”
The company plans to use the proceeds from this public issue to set up new diagnostic centers in Punjab, Karnataka, Himachal Pradesh and Maharashtra. The remaining funds will go towards repayment and prepayment on the company’s borrowings, while the remainder is used for general corporate purposes. The basis of allotment is likely to be on August 11. The date of listing has not been decided yet but it will be on August 17.
Adding to the subscription recommendation, Geojit also mentioned, “At the upper price band of Rs 954, KDL is available at a P/E of 95x (diluted) which appears to be overly expensive as compared to peers. Considering its unique business model with cost advantage and plans for standalone centres, the company’s revenue visibility for the future looks promising. We offer “Subscribe” on short term view for listing profit.
With that said, keep in mind that there are some risks because a large portion of a company’s revenue depends on payments under contracts with public health agencies. Geojit said that this share is about 67.5 percent. As per the Geojit note, the company has also reported negative net worth and losses in the past.
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