75205RIL has remained flat in last two months, should one buy its shares now or not?
Experts on the street opine that the near-term outlook is already priced in the leaving a limited room for upside.
South India based Vijaya Diagnostic Centre will launch its IPO (initial public offering) on September 1. The diagnostic chain has fixed a price band of Rs 522-531 per share having a face value of Rs 1 per share. Investors can bid for a minimum of 28 equity shares and in multiples, thereafter, translating to a minimum bidding amount of Rs 14,868 at the higher end of the price band. A retail investor can apply for maximum 13 lots or 364 shares for Rs 1,93,284.
The Rs 1,895.04 crore issue is entirely an OFS (offer for sale) of 35.6 million shares by promoter Dr S Surendranath Reddy. Investor Karakoram and Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1.
The buoyancy in the secondary markets is reflecting in the grey market as well. The premium for Vijaya Diagnostic Centre has increased to Rs 16 from Rs 10. However, the premium is still lower to Rs 40 at which the shares were quoting earlier.
“On the upper band of Rs 531, the asking P/E (price to earnings) comes at around 64x which seems to be on the higher side, also the issue is purely OFS and recent fiasco in primary markets have tumbled the sentiments of investors so it would be keen to watch for the subscription rush,” said Abhay Doshi of Unlisted Arena.
Brokerage view
Experts on the street opine that the near-term outlook is already priced in the leaving a limited room for upside.
Angel Broking | Rating: Neutral
Based on FY2021 numbers, IPO is priced at a Price to Earning of 64.3 times and EV/EBITDA (enterprise value to earnings before interest tax depreciation and amortization) of 30 times at the upper price band of the IPO, which is in line with the listed peer group. Company already has a higher market share in key geographies like Hyderabad and we do not expect the Covid related benefit to continue in coming years. According to Angel Broking at Rs 531, all the near term positives are priced in and leaves limited upside for the investors.
Dilip Davda – Primary Market Expert | Rating: May apply
This is a majorly south centric diagnostic service provider. The issue is fully priced based on its super performance so far. The segment is getting crowded post-pandemic and thus creating high competition going forward. The recent IPO of south based Krsnaa Diagnostic performed miserably post a listing. This is a pure secondary offer. Considering all these parameters, risk seekers/cash surplus investors may consider an investment with a long term perspective.
Marwadi Shares & Finance | Rating: Subscribe
Considering the FY-21 adjusted EPS (earnings per share) of Rs.8.26 on the post-issue basis, the company is going to list at a P/E (price to earnings) of 64.26 with a market cap of Rs 5,414.4 crore while its peers namely Dr. Lal Path Labs and Metropolis Healthcare are trading at a P/E of 80.66 and 56.55 respectively.
The brokerage firm has assigned a ‘Subscribe’ rating to the IPO as the company is one of the fastest-growing diagnostic chain with a dominant position in south India and is well-positioned to leverage the high growth in the Indian diagnostics industry. Also, it is available at a reasonable valuation as compared to its peers.
(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)