Vijaya Diagnostic extends gains after weak stock market listing

Hyderabad-based pathology chain Vijaya Diagnostic Centre Ltd made a tepid trading debut on Tuesday as its shares listed at a premium of barely 2% to the initial public offering (IPO) price but stretched the gains in the first hour.

The company’s shares listed on the BSE at Rs 542.30 apiece versus the issue price of Rs 531. However, the shares jumped to as high as Rs 588.05 apiece in initial trading. At 10:45 AM, the shares were around Rs 578 apiece. The BSE’s 30-stock benchmark Sensex was 0.4% higher.

The company now commands a market valuation of around Rs 5,890 crore. That puts it in the same bracket as Thyrocare Technologies Ltd, which has a market capitalisation of Rs 6,800 crore, but far away from Dr Lal PathLabs (Rs 34,600 crore) and Metropolis Healthcare (Rs 15,780 crore).

Vijaya Diagnostic’s IPO was oversubscribed but only due to the push by qualified institutional buyers (QIBs). The issue by the private equity-backed company, which had attracted anchor investors including the sovereign wealth funds of Abu Dhabi and Kuwait, was covered 4.5 times.

The retail book was just about oversubscribed with 1.2 times demand while the non-institutional investors’ portion was covered 1.33 times. The QIB portion was covered 13 times, saving the day for the company.

The public issue size, excluding the anchor book, was Rs 1,328 crore. The IPO, which closed September 3, comprised an offer for sale of about 3.57 crore shares by the company’s promoters and private equity investor Kedaara Capital. The promoter Dr S Surendranath Reddy sold about 51 lakh shares while Kedaara offloaded the remaining shares.

Vijaya Diagnostic provides a wide range of about 740 routine and 870 specialized pathology tests. It also offers 220 basic and 320 advanced radiology tests across a range of specialties.

The company is the largest integrated diagnostics chain in southern India by operating revenue. It has 81 diagnostic centres and 11 reference laboratories across 13 cities and towns in Telangana, Andhra Pradesh, the National Capital Region and Kolkata as on June 2021.