Suraksha Diagnostic IPO

About Suraksha Diagnostics Limited IPO:

Suraksha Diagnostics Limited IPO is an IPO of ₹846.25 crores. It consists of an offer for sale of 1,91,89,330 equity shares. The IPO will open on Nov 29,2024 and close on Dec 03,2024. Anchor bidding will take place on Nov 28, 2024 and shares will be credited on Dec 04, 2024. The initiation of refunds will take place on Dec 05, 2024.

Anchor investors:

The anchor investors’ bid opens on Nov 28, 2024. The company may allocate up to 60% of the QIB portion to anchor investors, out of which one third will be allocated to Mutual Funds.

Book running lead managers:

• ICICI Securities Limited
  
• Nuvama Wealth Management Limited
  
• SBI Capital Markets Limited
  

Retail and HNI application:

The retail portion of the Suraksha Diagnostics Limited IPO consists of not less than 35% of the net offer.

About company:

Suraksha Diagnostics is the largest full-service and integrated diagnostic chain headquartered in East India, by operating income as of FY2023. (Source: CRISIL Report). They also reported the highest compounded annual growth rate (CAGR) of 20.87% (non-COVID revenues) between FY 2022 and 2024 among peers such as Agilus Diagnostics Limited, Dr. Lal Pathlabs Limited, Metropolis Healthcare Limited and Thyrocare Technologies Limited. (Source: CRISIL Report).

Business Model:

The diagnostics company earns its revenue from the following sources:

They offer 2300+ tests that cover a range of specialties and disciplines. They include:

a) 788 routine pathology tests ranging from basic biochemistry and hematology to 647 specialized pathology tests such as advanced biochemistry, histopathology, and molecular pathology, and

b) 748 basic/intermediate radiology tests ranging from basic x-rays, ultrasonography (USG), and computerized tomography (CT) scans

c) 104 advanced radiology tests such as magnetic resonance imaging (MRI) scans and specialized CT scans, as of March 31, 2024

d) They also offer omni channel medical consultation services via online and offline modes to their customers under a single roof through 43 diagnostic centres which house 120 polyclinic chambers hosting 750+ doctors, as of March 31, 2024

Growth Trajectory:

Financials: Suraksha Diagnostics’ revenue increased to ₹219 crores in 2024, up from ₹190 crores reported in 2023. Their profit also grew to ₹23 crores in 2024.

Expansion: The company already has a network of 48 diagnostic labs and 8 satellite laboratories. In addition to that, it plans to open 10-15 new centres and 4-6 satellite labs across India.

Partnerships: The diagnostics chain has also tied up with Cluegenix to develop Indian protocols for malignancies.

Automation: Suraksha has a fully automated robotic lab, and aims to be a world-class lab in Southeast Asia.

Market Position:

Suraksha Diagnostics is the largest full-service and integrated diagnostic chain headquartered in east India, by operating income as of FY23. (Source: CRISIL Report).They also reported the highest compounded annual growth rate (CAGR) of 20.87% (non-COVID revenues between FY2022 and FY24) among peers which include Agilus Diagnostics Limited, Dr. Lal Pathlabs Limited, Metropolis Healthcare Limited and Thyrocare Technologies Limited.

Suraksha Diagnostics Limited IPO Key Points

Objectives of the IPO:

Carry out the Offer for Sale

Achieve the benefits of listing the Equity Shares on the Stock Exchange

Subscription Details:

Qualified Institutional Buyers: 50%

Non-Institutional Buyers: 15%

Retail: 35%

Potential Benefits for investors:

• Suraksha Diagnostics Limited is the largest full-service and integrated diagnostic chain by operating income as of Fiscal 2023. (Source: CRISIL Report). By investing in Suraksha Diagnostics Limited, the investor can be a part of the growth story of the largest diagnostics chain by operating income.

• Many key promoters and a promoter company are exiting. Hence, it presents investors a chance to invest in freed up shares of the company.

Suraksha Diagnostics Limited IPO Risk Factors

Dependency on West Bengal for 95.48% of revenue exposes the company to regional risks that could adversely impact operations and financial performance

• Any major outbreak of a health epidemic may affect their workforce and in turn affect their business
• The company significantly depends on third party vendors and suppliers to provide them testing equipment, test kits, and reagents, and any failure in procuring such equipment or recall of existing testing equipment, test kits, and reagents could adversely affect their business, results of operations and financial condition.

Key Strategies of Suraksha Diagnostics Limited

Strengthen their position in their core geography i.e. Kolkata and the rest of West Bengal

• Expand beyond their core markets in adjacent geographies of eastern and northeastern India
• Supplement organic growth with selective acquisitions

Conclusion

Suraksha Diagnostics Limited is a blend of strong financials, market leadership and a chain that deploys the latest technologies to ensure the patient is well served. However, intense competition in the sector, dependence on third parties and concentration of facilities in West Bengal can pose challenges. If you want to invest in the IPO, assess the strengths and weaknesses thoroughly.