IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

Established in 1981 by Dr S Surendranath Reddy, Vijaya Diagnostic is the largest integrated diagnostic chain in southern India, by operating revenues, and also one of the fastest-growing diagnostic chain by revenue for FY20 (source: Crisil Report). The business was carried out under sole proprietorship. It was later taken over by the company in 2005. Vijaya provides 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. The company offers a comprehensive range of ~740 routine and 870 specialised pathology tests and ~220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30, 2021.

Investment Rationale

Long track record of delivering consistent profitable growth

For FY21, Vijaya recorded a total income of Rs. 388.5 crore, representing a CAGR of 13.26% for FY19-20. The operating revenue per test was Rs. 428 while OPBDIT per test was Rs. 168 for FY20 while operating revenue per customer was Rs. 1,214 and OPBDIT per customer was Rs. 475 for FY20. Vijaya's OPBDIT margin ranked second among other major diagnostics players as per the Crisil Report.

Well positioned to leverage high growth in Indian diagnostics industry

According to the Crisil Report, the Indian diagnostics market was valued at ~Rs. 71,000-73,000 crore in FY21, and is projected to grow at a CAGR of ~12-13% to reach ~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.

For details, click on the link below: Link to the report

Source : Equity Bulls

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