Vijaya Diagnostics IPO: Vijaya Diagnostics IPO Date, Details & Review

Vijaya Diagnostics IPO: Vijaya Diagnostics IPO Date, Details & Review

Last updated: 31 Aug, 2021 | 01:44 pm

Vijaya Diagnostics IPO: Vijaya Diagnostics IPO Date, Details & Review

Vijaya Diagnostic Centre Limited IPO opens for subscription on 1st September. The company is looking to raise Rs 1894 crore through the public issue. Here are the details:

Vijaya Diagnostic Centre IPO Date: 1 September - 3 September 2021

Vijaya Diagnostic Centre IPO Price band: Rs 522 - 531 per share

Issue Size: Rs 1862 - Rs 1894 crore

Reservation: QIB 50%, Retail - 35%, NII 15%.

Employee Reservation: Discount of Rs 52 per share

Bid lot: 28 shares, and in multiples of 28 shares

IPO Objective

The funds raised from the IPO will be utilized:

  • To make an offer for sale (OFS) of 35,688,064 shares.
  • To achieve share listing benefits on the stock exchange.

About Vijaya Diagnostic Centre

  • The company was established in 2002, and it is one of the fastest-growing diagnostic chains in South India by operating revenue.
  • It offers a one-stop solution for radiology and pathology testing to customers through an extensive operational network.
  • Its network consists of 80 diagnostic centers and 11 laboratories in 13 different cities and towns. The states in which they are present are Telangana, Andhra Pradesh, Kolkata, and National Capital Region.
  • The company offers a comprehensive range of approximately 870 specialized pathology tests, 740 routines, and 220 basic and 320 advanced radiology tests as of 30th June 2021.
  • At present, they offer RT-PCR testing and/or CT scan for COVID-19 diagnosis across 33 diagnostic centers in 11 towns and cities. They also offer COVID-19 vaccination services at their Gurugram and Kolkata diagnostic centers.

Listed Peers

  • The listed peers of Vijaya Diagnostic Centre include some of the big names like Dr. Lal Path Labs and Metropolis Healthcare Ltd and recently listed Krsnaa Diagnostics.
  • In terms of revenue, Vijaya Diagnostic stands at the bottom. Revenues of Dr. Lal Path Labs and Metropolis Healthcare exceed Vijaya’s by more than 4x and 2x respectively. 
  • Both Dr. Lal Path Labs and Metropolis Healthcares have Earning Per Share (EPS) around 35, while Vijaya Diagnostic has EPS of just 8.26 (both basic and diluted).
  • Vijaya Diagnostic is at par with both Dr. Lal Path Labs and Metropolis Healthcare. However, Krsnaa Diagnostics tops the table with 80% RoNW.


  • The revenue from operations has grown from Rs 292.59 crore in FY19 to Rs 376.75 crore in FY21 but the rate of growth has slowed down.
  • The EBITDA Margins have consistently grown for the company and are best among its peers.
  • For FY21, the company reported a total income of Rs 388.59 crore, representing a CAGR of 13.26% for fiscal years 2019 to the fiscal year 2020. 
  • The EPS has almost doubled from 4.5 in FY19 to 8.3 in FY21. However, compared to its peers in the sector, it is still on the lower side.
  • The RoNW has remained around 23% for all the three years.
  • For FY21, the company reported 86.21% and 9.99% of their revenue from operations from Telangana and Andhra Pradesh, respectively.


Brand positioning - The combination of their strong brand position driven by their long operating history in their core geographies, extensive network and reputation for providing quality diagnostic services, positions them well to continue to grow their business in Telangana and Andhra Pradesh markets and take advantage of the growth of the Indian diagnostic industry. .

One-stop solution at an affordable price - VDCL offers a comprehensive range of approximately 740 routine and 870 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30, 2021. Its ‘hub and spoke’ model has become popular and has been the reason for the increase in their profits in the recent quarter. 

Use of technology with strong IT infrastructure - The company's use of technology allows them to provide high-quality and reliable diagnostic services to its customers. Their diagnostic center operations are supported by a front-end centralized information technology platform.

Experienced management - The company is led by a strong and dedicated team of experienced professionals with skill sets that are complementary and requisite for the fast-growing Indian diagnostic market. 

Growth Potential

Growing Market: According to the CRISIL Report, the Indian diagnostics market was valued at approximately Rs 71,000 crore to Rs 73,000 crore in FY21, and is projected to grow at a CAGR of around 12% to 13% to reach approximately Rs 92,000 crore to Rs 98,000 crore by FY23. Also,the diagnostics market in Telangana and Andhra Pradesh, the states in which Vijaya Diagnostic has a significant presence, is projected to grow to ~ Rs 12,000 crore to Rs 13,000 crore by FY23.

Increase footprint in core markets: The company plans to strengthen their presence in the region in which they currently operate. They plan to expand their service network by opening additional diagnostic centers. They also plan to enhance their laboratory capacity and test menu by adding the latest technologies.

Setting up spoke centers and increasing home collection: The diagnostic market in India is under-penetrated. To get the edge over the existing competition, the company plans to increase its home collection services in core geographies to reach out to more customers.

Expand to adjacent geographies - The company has identified key cities and towns that are underserved, and their brand is well-taken. They plan to reach such cities and also expand to the presence in east India.

Organic growth through selective acquisitions - The diagnostics industry is highly fragmented, and there is a strong demand for quality service and complex tests from customers. In light of this opportunity, the company plans to explore select expansion opportunities through strategic acquisitions of/partner with regional diagnostic service providers who possess brand recognition among an existing customer base.

Key Risks

The Covid Impact - Just like other industries and businesses, Vijaya Diagnostic has been impacted by COVID last year. There is significant uncertainty regarding the duration and long-term impact of the COVID-19 pandemic. It brings uncertainty to the company's business, operations, or potential expansion plans in the future.

Too much dependency on few locations - The company has reported 86.21%, 89.83%, and 88.04% of its revenue from operations from Telangana for FY21, FY20, and FY19, respectively. Any civil unrest, disruption, or sustained economic downturn that reduces the demand for services in the state of Telangana could adversely affect the business of the company. 

Dependency on third parties - Vijaya Diagnostic depends on third parties to provide the testing equipment and reagents. If they fail to continue to do so, it will affect the business of the company.

Vijaya Diagnostic Centre IPO: INDmoney Recommendation

Vijaya Diagnostic has reported a steady growth in topline (CAGR of 13.5%) over the last three years. The company’s bottom line has grown at a healthy CAGR of 36%. As it stands today, the company is the largest and fastest growing diagnostic chain with a dominant position in South India. 

However, there are certain concerns. As it is a complete Offer for Sale, Vijaya Diagnostics will not get any proceeds from the issue. Further, the company has a huge concentration catering to just 2 states in South India. The competition has increased as many players are getting into this business post covid pandemic.

At the higher end of the price band, Vijaya Diagnostic Centre IPO is priced at a P/E ratio of ~64 times FY21 EPS (on a fully diluted on post-issue basis). This is lower compared to listed peers Dr Lal Path Labs (110 times), and Metropolis Healthcare (81 times). The company’s return ratios are in-line with its peers. 

Given factors such as lacklustre growth in topline and bottomline, stable margins and return ratios, concentration risk and expensive valuations, we remain “Neutral” on the prospects of this issue.