Suraksha Diagnostic shares list at 1% discount on NSE

Suraksha Diagnostic Limited made its debut on the stock exchanges on December 6, 2024, with its shares listed on both the BSE and NSE. The listing price was ₹437 on the BSE and ₹438 on the NSE, reflecting a marginal discount of approximately 0.9% and 0.68%, respectively, to the IPO issue price of ₹441 per share. The tepid debut indicates cautious investor sentiment despite a moderately subscribed IPO.

Suraksha Diagnostic Listing Details

• Exchange Platforms: BSE and NSE
• Listing Price (BSE): ₹437 (0.9% discount to the issue price)
• Listing Price (NSE): ₹438 (0.68% discount to the issue price)
• Issue Price: ₹441 per share
• Issue Size: ₹846.25 crore
• Offer Type: 100% Offer for Sale (OFS)

The stock’s muted performance aligns with its grey market premium (GMP), which hovered at ₹13-₹15 before the listing, signaling minimal investor expectations for significant gains.

Suraksha Diagnostic First-Day Trading Performance

• Intraday High: ₹449
• Intraday Low: ₹426.65
• Closing Price (BSE): ₹421.45 (-3.78% from issue price)
• Closing Price (NSE): ₹422.15 (-3.67% from issue price)
• Volume Traded:

          a. BSE: 2.1 million shares
          b. NSE: 7.8 million shares

Despite opening close to its issue price, the stock witnessed a decline throughout the day, reflecting subdued market enthusiasm.
 

Suraksha Diagnostic Market Sentiment and Analysis 

Investor response to Suraksha Diagnostic's IPO and subsequent listing was lukewarm, driven by several factors:

• Macroeconomic Conditions: Weak market sentiment amidst global uncertainties.
   
• IPO Composition: Being entirely an OFS, the IPO did not raise fresh capital, reducing the appeal for long-term growth prospects.
• Subscription Figures:

          a.QIB: 1.74x

          b.NII: 1.40x

          c. Retail: 0.94x (undersubscribed)

 The retail segment’s underwhelming participation highlights caution among small investors.

Suraksha Diagnostic Growth Drivers and Challenges

Growth Drivers:

• Strong Regional Presence: Dominant diagnostic player in eastern India, with a network spanning 215 customer touchpoints.
• Rising Demand for Diagnostics: Increasing health awareness and government healthcare initiatives in tier-2 and tier-3 cities.
• Competitive Pricing: Affordable services make Suraksha Diagnostics an attractive option for middle-income and rural customers.

Challenges:

• High Competition: Intensifying rivalry from established diagnostic players such as Dr. Lal PathLabs and Metropolis Healthcare.
• Profitability Concerns: Inconsistent earnings due to rising operational costs.
   
• Regional Concentration Risk: Heavy reliance on eastern India limits geographical diversification.

Suraksha Diagnostic Utilization of IPO Proceeds 

As the Suraksha Diagnostic IPO was a 100% OFS, the proceeds went to the selling shareholders and did not contribute to the company’s capital for growth initiatives or debt reduction.

Suraksha Diagnostic Financial Performance

• Revenue declined from ₹223.1 crore in FY22 to ₹190.1 crore in FY23, rebounding to ₹218.7 crore in FY24 and ₹60.7 crore in Q1 FY25.
• EBITDA dropped from ₹45.3 crore in FY22 to ₹32.6 crore in FY23 but recovered to ₹46.2 crore in FY24 and ₹12.3 crore in Q1 FY25.
• Net profit fell from ₹20.8 crore in FY22 to ₹6.0 crore in FY23, rising again to ₹23.1 crore in FY24 and ₹7.6 crore in Q1 FY25.

While revenue recovery in FY24 was evident, inconsistent profit margins highlight operational inefficiencies that may impact long-term sustainability.
 

Summary

Suraksha Diagnostic's IPO and subsequent listing reflect a cautious investor approach amidst a competitive industry and tepid market conditions. Despite a strong regional presence and growing demand for diagnostic services, the company's regional concentration, high competition, and lack of fresh fund infusion pose significant challenges. Long-term prospects hinge on strategic geographical expansion and operational efficiencies. Investors are advised to watch the company’s financial performance and market position closely before making long-term investment decisions.