Is Suraksha Diagnostic IPO Good or Bad - Detailed Review

Suraksha Diagnostic IPO is kicking off its initial public offering which will be open from November 29, 2024, to December 03, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Suraksha Diagnostic is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers a Suraksha Diagnostic IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice.

Company Overview of Suraksha Diagnostic IPO

Incorporated in 2005, Suraksha Diagnostic Limited is a one-stop solution for pathology, radiology testing, and medical consultation services. The company operates through its extensive network of 8 satellite laboratories (co-located with diagnostic centers), and 215 customer touchpoints, including 49 diagnostic centers and 166 sample collection centers (primarily franchised) across West Bengal, Bihar, Assam, and Meghalaya.

Through its extensive network, the company offers over 2,300 tests, which include 788 routine pathology tests ranging from basic biochemistry and hematology to 664 specialized pathology tests such as advanced biochemistry, histopathology, and molecular pathology. These tests further include 766 basic/intermediate radiology tests ranging from basic x-rays, ultrasonography (“USG”), and computerized tomography (“CT”) scans to 119 advanced radiology tests such as magnetic resonance imaging (“MRI”) scans and specialized CT scans

The company offers comprehensive integrated pathology and radiology testing services, along with omnichannel medical consultation services available both online and offline. These services are provided under one roof at 44 diagnostic centers, which feature 126 polyclinic chambers staffed by over 750 doctors.

A significant portion (93.83%) of the company's revenue comes from its B2C segment and is primarily concentrated in Kolkata and West Bengal. As of FY24, it has derived 53.30% of revenue from pathology, 46.03% from radiology, and 0.18% from COVID-19 tests, offering an average of 5.26 tests per patient. The company’s business concentration.

Financial Overview of Suraksha Diagnostic IPO

Coming to the financials, Suraksha Diagnostic’s revenue from operations was recorded at Rs.218.70 crores in FY 2024, marking a 15% growth compared to Rs.190.13 crores in FY23. However, revenues were slightly higher in FY22 reporting at Rs.223.19 crores in FY22. This indicates that the company is in a recovery trajectory after a dip in FY23.

While the operating revenues of FY24 were lower compared to FY22, the profits recorded were higher at Rs. 23.12 crores in FY24, compared to Rs. 208.24 crores in FY22. This indicates an improvement in the company’s operational strength which has resulted in a higher margin.

In terms of shareholders' returns and resource efficiency, the company has delivered a decent performance reporting an ROE of 14.09% and an ROCE of 21.46% as of FY24. Additionally, the company maintains a healthy leverage balance, as indicated by its debt-to-equity ratio of 0.20 during the same period.

Strengths of Suraksha Diagnostic IPO

• The company has diagnostic chains within eastern India and is well positioned to leverage growth opportunities for organized diagnostic chains in the diagnostic services markets in eastern and north-eastern India

• The company is an integrated diagnostics provider with a one-stop solution offering pathology and radiology testing, and medical consultation services 

• The company has Technologically advanced clinical infrastructures and trained personnel providing diagnostic services

Risk Factors of Suraksha Diagnostic IPO

• In Fiscal 2024, approximately 95.48% of the company’s revenue from operations was generated from West Bengal. This significant reliance on a single region indicates that any loss of business or adverse developments in West Bengal could have a negative impact on the company’s overall business.

• The diagnostics industry in India is highly competitive, and the company's inability to compete effectively with other healthcare service providers could potentially have an adverse impact on its business operations and overall performance.

• In Fiscal 2024, the B2B segment accounted for 6.17% of the company's revenue from operations. Any non-renewal or cancellation of arrangements with institutional customers, such as hospitals, or the termination of Public-Private Partnership contracts could adversely impact the company's business and financial performance.

Strategies of Suraksha Diagnostic IPO

• To Strengthen its position in its core geography, i.e., Kolkata and the rest of West Bengal.

• To expand beyond its core markets into adjacent geographies in eastern and northeastern India.

• Supplement organic growth with selective acquisitions.

• Leverage technology to elevate customer experience.

• Augment medical consultation services are offered through polyclinic chambers at its diagnostic centers to boost revenue.

• Enhance revenue by forging business-to-business (B2B) and corporate partnerships.

Suraksha Diagnostic Vs Peers

Below is the image showing a comparison of Suraksha Diagnostic with its listed industry peers as of FY24:

Source: RHP of the company

Suraksha Diagnostic held a market share of approximately 1.15% to 1.30% in the diagnostic services market in Eastern India during Fiscal 2024. In comparison, peers such as Dr. Lal Pathlabs Limited commanded a significantly higher market share of 5.30% to 5.70% in their primary market, North India. Vijaya Diagnostic Centre Limited held a market share of 2.20% to 2.50% in their key market, South India. This highlights the relatively smaller presence of the company in its major market compared to its competitors in their respective regions.

As Suraksha Diagnostic is mainly concentrated in the regions of West Bengal and Kolkata, the company operates on a much smaller scale and has the lowest revenue among its peers. In terms of shareholder returns, the company has rather performed decently with an ROE of 14.09% which is the third highest among the list.

Objective Of Suraksha Diagnostic IPO

Suraksha Diagnostic IPO only comprises an offer for sale, which means that the company won't be receiving any proceeds from this offer. Instead, all proceeds will go to the company's selling shareholders.

Suraksha Diagnostic IPO Details

IPO Date

Suraksha Diagnostic IPO is open to subscription from November 29, 2024, to December 03, 2024. The shares will be allocated to investors on December 04, 2024, and the company will be listed in the NSE and BSE on December 06, 2024

IPO Issue Price

Suraksha Diagnostic is offering its shares in the price band of Rs.420 to Rs.441 apiece. This means you would require an investment of Rs.14,994 per lot (34 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The Suraksha Diagnostic is offering a total of 19,189,330 shares, amounting to Rs. 846.25 Crores which will be completely offered through an offer for sale.

IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for Suraksha Diagnostic. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Suraksha Diagnostic is. Thus, it is important to financially analyze the stock before investing in it.

IPO Allotment Status

The shares from Suraksha Diagnostic Limited will be allotted to its investors on December 04, 2024. One can check the allotment status for the IPO from its registrar Kfin Technologies Limited Private Limited, the BSE website, or your broking platform where you have applied for the IPO.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Suraksha Diagnostic IPO

Suraksha Diagnostic IPO Review

Suraksha Diagnostic is a growing player in the diagnostics industry, with good financials, a strong regional presence in Eastern India, and strategic expansion plans. However, its heavy reliance on West Bengal, and smaller market share compared to peers, pose notable risks. Investors with a long-term perspective and moderate risk appetite may consider investing in this IPO. However, it is recommended for investors to do their own research before making an investment decision.

For those interested in investing in such IPOs, you can open a demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.