Suraksha Diagnostic Limited, founded in 1992, is a prominent player in the pathology and radiology services sector in Kolkata, providing integrated services under one roof. With its strong brand recognition, extensive network, and reputation for quality diagnostic services, the company is poised to expand its footprint in east and north-eastern India. Suraksha Diagnostic is offering ₹846.24 Crores through a book-built IPO, consisting entirely of an Offer for Sale (OFS) of 191.89 lakh shares. The IPO price band is set at ₹420 to ₹441 per equity share.

The subscription period for this IPO began on November 29, 2024, and will close on December 3, 2024, with a tentative listing date on December 6, 2024, on both BSE and NSE.

IPO Details and Subscription Status

At the upper price band of ₹441, the market capitalization of Suraksha Diagnostic will be approximately ₹2,296.76 Crores. The lot size is set at 34 shares, and the minimum investment for retail investors is ₹14,994. High-Net-Worth Individuals (HNIs) are required to invest in 14 lots (476 shares), totaling ₹2,09,916. As of December 3, 2024, the IPO is subscribed only 0.34x, signaling a lack of strong investor interest, especially given that it is the final day of subscription.

Financial Performance and Valuation

The company’s revenues for the quarter ending September 30, 2024, were ₹618.49 million, while the EBITDA stood at ₹217.21 million, and the Profit after Tax (PAT) was ₹76.67 million. These figures represent a decline compared to previous fiscal years, with the PAT for FY 2023 and FY 2022 being significantly higher at ₹231.27 million and ₹208.24 million, respectively.

For the Suraksha Diagnostic IPO, the company is issuing shares at a pre-issue EPS of ₹4.43 and a post-issue EPS of ₹4.41. The pre-issue P/E ratio stands at 99.55x, while the post-issue P/E ratio increases slightly to 99.93x, which is notably higher than the industry P/E ratio of 79.65x. This valuation appears relatively high, particularly when considering the company’s recent financial performance and the lack of significant growth momentum in the short term.

Objectives of the IPO

Since this is an Offer for Sale (OFS), Suraksha Diagnostic will not receive any proceeds from the IPO. All proceeds will go to the selling shareholders, based on the number of shares they offer for sale in the market.

Market View and Recommendation

Given the high P/E ratio, lack of Grey Market Premium (GMP), and the modest subscription figures, the Suraksha Diagnostic IPO seems overpriced at its current levels. The company’s financials and valuation do not suggest strong potential for listing gains or a lucrative long-term investment.

While Suraksha Diagnostic has a strong presence in Kolkata and neighboring markets, the IPO pricing appears to have already priced in much of its growth prospects. Given the lack of strong investor demand and the premium valuation, it is recommended that investors avoid the Suraksha Diagnostic IPO for both listing gains and long-term investment purposes.

For real-time updates on the Suraksha Diagnostic IPO subscription and allotment status, check the official BSE and NSE portals.