Suraksha Diagnostic is a leading name in the diagnostic services industry in India, particularly in Kolkata, where it was established in 1992. The company offers comprehensive pathology and radiology services under one roof, positioning itself as a trusted healthcare provider in its core geography. Suraksha Diagnostic enjoys a dominant market position in Eastern India and aims to expand further in northeastern India as well. The company’s solid operating history, extensive network, and strong reputation for providing quality diagnostic services set it apart in the fast-growing diagnostic services market.

Suraksha Diagnostic is offering a Book Built Issue amounting to ₹846.24 Crores, consisting entirely of an Offer for Sale (OFS) of 191.89 lakh shares. The subscription period for the Suraksha Diagnostic IPO opens on November 29, 2024, and closes on December 3, 2024. The allotment date is expected to be finalized on December 4, 2024, and shares will be listed on the BSE & NSE on December 6, 2024.

The price band for the Suraksha Diagnostic IPO is set between ₹420 to ₹441 per equity share. At the upper price band, the market capitalization of the company will be ₹2,296.76 Crores. The lot size for the IPO is 34 shares, with a minimum investment for retail investors at ₹14,994. For High-Net-Worth Individuals (HNIs), the minimum investment is 14 lots (476 shares), totaling ₹2,09,916.

IPO Subscription Status and Anchor Investment Insights

As of December 2, 2024, the IPO subscription status shows that the IPO was 0.25 times subscribed on the second day of its subscription period. This indicates low investor demand, but the final subscription details will become clearer as the deadline approaches.

Financial Performance and Market Metrics

Suraksha Diagnostic has shown mixed performance in recent fiscal years. The revenues from operations for the Three Months of FY2024 were ₹618.49 million, showing a decrease from ₹2,222.60 million in FY2023 and ₹2,257.68 million in FY2022. The EBITDA for FY2024 stood at ₹217.21 million, which is lower compared to ₹728.39 million in FY2023.

Despite these fluctuations, the company’s Profit After Tax (PAT) for the Three Months of FY2024 was ₹76.67 million, an increase from ₹60.65 million in FY2023 but lower than ₹208.24 million in FY2022.

For the Suraksha Diagnostic IPO, the company has a pre-issue earnings per share (EPS) of ₹4.43 and a post-issue EPS of ₹4.41. The pre-issue P/E ratio stands at 99.55x, and the post-issue P/E ratio is 99.93x, which is significantly higher than the industry’s average P/E ratio of 79.65x. This suggests that the IPO is fully priced relative to its sector.

The company’s Return on Capital Employed (ROCE) for FY24 is 21.46%, and Return on Equity (RoE) is 14.09%, indicating a solid but not exceptional return on investment.

Grey Market Premium (GMP) and Investment Recommendation

The Grey Market Premium (GMP) for the Suraksha Diagnostic IPO is expected to be ₹0, indicating no immediate listing gains. GMP is not a reliable indicator of post-listing performance, and it is mainly driven by demand and supply in the unregulated grey market.

Objectives of the IPO

Unlike traditional IPOs, Suraksha Diagnostic will not receive any proceeds from the Offer. Instead, all proceeds from the Offer for Sale (OFS) will be allocated to the selling shareholders in proportion to the shares sold by them.

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The Current active IPO is Ganesh Infraworld and Suraksha Diagnostic.

Investment Advice

Given the financial performance, valuation, and GMP, we recommend that investors avoid the Suraksha Diagnostic IPO for both listing gains and long-term investment. The high P/E ratio, coupled with the company’s declining revenues and moderate financial growth, make this IPO less attractive for those seeking short-term returns.

How to Check Allotment Status

Once the allotment is finalized on December 4, 2024, follow these steps to check your Suraksha Diagnostic IPO allotment status:

1. Visit the registrar's website.
2. Select Suraksha Diagnostic Limited IPO from the dropdown.
3. Enter your application number, PAN, or DP Client ID.
4. Submit the details to view your allotment status.

Conclusion

The Suraksha Diagnostic IPO appears fully priced and lacks listing gains potential, given the high P/E ratio and lackluster financial performance. We recommend that investors exercise caution and consider other opportunities that may offer higher returns in the short term.

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