Stay put in Vijaya Diagnostics Centre, say analysts
After a muted listing the counter picked up the pace and was quoting at Rs 635 advancing Rs 104 or 20%.
Shares of Vijaya Diagnostics Centre on Tuesday got listed at Rs 540, registering a gain of 2.13% against the issue price of Rs 531 on the NSE. After a muted listing the counter picked up pace and was quoting at Rs 635 advancing Rs 104 or 20%. On an intraday basis, the stocks touched a low of Rs 532.50 and a high of Rs 635.45 on the NSE.
Vinit Bolinjkar, Head of Research at Ventura Securities suggests investors should buy the stock as it has all the ingredients of growth, a good business model, excellent management. Unlike the other listed diagnostic players its business model offering not only pathology but radiology services also. They are a household name on the captive market of AP and Telangana and the company is evaluating other inorganic growth opportunities. Vijaya is also geographically diversified into the eastern market of Kolkatta through their subsidiary.
Likewise, Saurabh Joshi Research Analyst at Marwadi Shares and Finance recommends investors to stay put in the counter for the long term. “Vijaya Diagnostic Centre is the largest integrated diagnostic chain in southern India and also one of the fastest-growing diagnostic chain for FY20. The company is well-positioned to leverage the high growth in the Indian diagnostics industry and is also available at reasonable valuation as compared to its peers,” Joshi added.
However, Gaurav Garg, Head of Research at CapitalVia Global Research advised short term traders to close their positions while long term investors to hold on the counter. “Qualified institutional buyers backed Vijaya Diagnostics public offering, bidding for 13.07 times the number of shares reserved for them. It gets almost all of its business from walk-in customers, which is significantly higher than its competitors. The diagnostics industry will continue to grow on a long-term basis, with strong cash flow generation prospects,” Garg said.
“Vijay Diagnostic Centre Limited IPO debut at a premium of 8% to its upper band of the IPO price. The company is trading at price to earning of 67 times and EV/EBITDA (enterprise value to earnings before interest tax depreciation and amortization) of 32 times based on FY2021 numbers which are on the higher side as compared to its peers,” said Yash Gupta of Angel Broking.
Vijaya Diagnostic Centre is one of the fastest-growing diagnostic chains in Southern India. The company offers a one-stop solution for pathology and radiology testing services. The company offers around 740 routine tests, 870 specialized pathology tests, 220 basic tests, and 320 advanced radiology tests. It has an operational network consists of 80 diagnostic centres and 11 reference laboratories spread across 13 cities and towns in the states of Telangana, Andhra Pradesh, National Capital Region, and Kolkata.
For the financial year ended March 31, 2021, the company reported total revenue of Rs 388.59 crore compared to Rs 302.94 crore in FY19. During the same period, the company posted a profit of Rs 84.91 crore in FY21 versus Rs 46.27 crore in FY19.