The initial public offering (IPO) of Suraksha Diagnostic opened for subscription on November 29. On day 1, the IPO recorded a slow response with 11 percent subscription. suraksha diagnostic aims at raising Rs 846-crore from the initial offer which is entirely Offer for Sale (OFS). The shares will be available in the price range of Rs 420 to Rs 441 apiece. The issue will close on 3 December.
The Kolkata-headquartered company’s IPO consists of an Offer for Sale (OFS) of 19,189,330 equity shares worth Rs 846.25 crore, at the upper end of the price band, by promoters and investor shareholders, with no fresh issue component.
An INSIGHT:
The Suraksha brand was established in 1992. In Kolkata, offering comprehensive Pathology and Radiology services under one roof. The company’s flagship central reference laboratory has accreditations from CAP and NABL. It also has ISO 9001:2015 certification for its quality management system. They believe that the combination of their dominant position driven by their operating history in its core geography, extensive network and reputation for providing quality diagnostic services positions them best to continue to grow its business in Kolkata and remaining east Indian and adjacent north-east Indian markets and take advantage of the tailwinds for organized diagnostic chains in the large and fast-growing of the diagnostic services markets in eastern and north-eastern India.
The promoters and existing shareholders of Suraksha Diagnostics are offloading their stake in the company through an Initial Public Offering (IPO) scheduled between November 29 and December 3, 2024. The IPO is an Offer for Sale (OFS) of up to 1,91,89,330 equity shares, valued between ₹805.95 crore and ₹846.25 crore based on the price band of ₹420–441 per share. No fresh equity will be issued during this IPO.
The company aims to raise Rs 846.25 crore by offloading 1.92 crore shares of promoters and other selling shareholders. This means the raised funds will go to the bank accounts of promoters and selling shareholders. None of the raised money will be used for the company.
The company’s shares were neither fetching a premium nor a discount in the grey market. This indicates a lackluster to muted listing for the stock. Suraksha Diagnostics, headquartered in Kolkata, operates a robust network comprising a central reference lab, eight satellite labs, and numerous diagnostic and sample collection centers across several Indian states, including West Bengal, Bihar, Assam, and Meghalaya.
Grey Market Performance
In the grey market, Suraksha Diagnostic’s shares are trading at par with the issue price. This indicates that the listing may occur near the offer price, reflecting subdued investor sentiment in the unofficial trading market. Qualified Institutional Buyers (QIBs) did not participate on Day 1, which is unusual for an IPO of this scale. Analysts believe QIBs might step in on the final day to avoid under-subscription, a trend observed in other recent IPOs like Hyundai Motor India’s.
Non-institutional investors (NIIs) subscribed to only 4% of their quota on the first day. The low participation rate raises concerns about demand among high-net-worth individuals and other non-retail investors. Retail investors showed limited interest on Day 1, subscribing to only 0.20 times their allocated portion. This response may improve in the coming days as more investors assess the company’s growth potential and market dynamics.
SURAKSHA Diagnostic at a GLANCE:
They offer a one-stop integrated solution for Pathology and Radiology testing and Medical Consultation Services to thier customers through our extensive operational network.
Advanced Radiology and Pathology Equipment
Suraksha Centres are equipped with basic and advanced radiology and pathology equipment and instruments from HORIBA, Schiller Healthcare India, Beckman Coulter, ITDOSE, Boston Ivy, Siemens Healthineers, Wipro GE Healthcare, bioMérieux, Biorad, BPL Medical Technologies Limited, Carestream Health India, Roche Diagnostics India, Samsung India Electronics, Becton Dickinson India, and Phillips India. Our technology is backed by our laboratory doctors, radiologists, technical staff and other qualified scientific staff who manage our laboratories. [Diagnostic services range from Radiology to Pathology, Histopathology, Molecular Biology, Cytogenetic, Cardiology, Gastroenterology and Neurology tests.
Commitment to Superior Quality
We focus on a customer centric approach to delivering our services leads to high customer satisfaction and increasing customer retention. For convenience of our customers, we provide value-added services such as home collection of samples, house calls and various delivery and access modes (i.e., at diagnostic centres, SMS, email, web portal) to test reports. Our home collection service allows samples to be collected from our customers’ locations, such as their homes or offices.
The Neighborhood Polyclinics
Suraksha Polyclinics is another aspect of Suraksha’s service, where specialist Doctors can be consulted directly by patients. A majority of our diagnostic centres have an associated polyclinic. Doctors visiting our polyclinics range across almost all specialties which includes General Physicians, Pediatricians, Gynecologists, Surgeons and super-specialists such as Cardiologists, Neurologists, Rheumatologists, Oncologists, Hematologists, and Nephrologists.
Mission
To establish a network of clinics and diagnostic facilities strengthening our position in our core geography, and to expand beyond our core markets in adjacent geographies of eastern and north-eastern India. We aim to provide customers quality, hygienic and reliable diagnostic services at marginally premium yet affordable prices.
Suraksha Diagnostics has centers in the following cities in India:
- Kolkata: Has many centers, including Barisha, Garia, Regent Park, Jadavpur, Haltu, Ballygunge, East Kolkata Township, Sealdah, Entally, Kadamtala, Beadon Street, Kankurgachi, Salt Lake City Sector 3, and Salt Lake City Sector 1 .
- Howrah: Has centers in Chunavati and Kadamtala
- Hooghly: Has a center on Tn Mukerjee Road
- Midnapore: Has a center in Tamluk
- South 24 Parganas: Has a center in Diamond Harbour
- Bihar: Has centers in Patna
- Assam: Has centers in Guwahati
- Shillong, Meghalaya: Has a center in Shillong
OFFER FOR SALE:
The 846-crore Rs initial share-sale is open for public subscription today on November 29 and concludes on December 3. The shares will be available in the price range of Rs 420 to Rs 441 apiece. The Kolkata-headquartered company’s IPO consists of an Offer for Sale (OFS) of 19,189,330 equity shares worth Rs 846.25 crore, at the upper end of the price band, by promoters and investor shareholders, with no fresh issue component. Under the OFS, promoters Somnath Chatterjee, Ritu Mittal, and Satish Kumar Verma; and investors OrbiMed Asia II Mauritius Ltd, Munna Lal Kejriwal and Santosh Kumar Kejriwal will offload shares.
MARKET INTELLIGENCE AND ANALYTICS:
Structure of Diagnostics Industry:
Segment-wise break-up of the diagnostics industry (FY24 estimates):
Pathology forms a 56% of the overall diagnostics industry. Pathology testing, including routine and specialised tests, commands a higher share of the diagnostics market. Typically, a battery of tests is prescribed under a single pathology test panel for a single patient.
Likewise Radiology forms a 44% of the overall diagnostics industry. Radiology tests are costlier than pathology tests. Though the volumes of pathology tests prescribed are greater, the price of a single pathology test is usually lower than a single imaging test such as an MRI or even an X-ray scan. The latter may usually cost 2-3 (or more) times a regular pathological test.
48 diagnostic centres, including 13 hub centres and 35 spoke centres across E
Industry shifting towards diagnostic chains:
The Indian Diagnostics Industry is highly fragmented, given the high proportion of standalone centres and hospitals labs occupying a smaller share of the pie. Diagnostic chains are further split into regional and multi-regional chains, with regional chains accounting for the majority. the industry’s profitability is defined based on high volume of testing and optimal utilisation of labs. Given the low entry barriers and lack of a strong regulatory environment, the industry has many standalone players. This has made the industry highly competitive and fragmented, and hence, standalone diagnostic players are finding it hard to stay profitable. The standalone players also face problems in scaling up their operations on account of the large capital expenditure required for investment into technologies enabling complex radiology and pathology services diagnostic chains, on the other hand, have stronger financial discipline and negotiating power with suppliers, greater capital, and administrative resources to meet the needs to sustain the business compared with standalone diagnostic centres. diagnostic chains have expanded into geographies, where they have limited presence via the inorganic route. tier 2 and 3 cities are the major focus of these established players, where struggling standalone centres become prime opportunities for acquisition. The industry has witnessed a shift from standalone centres to diagnostic chains, due to their higher quality of service and unavailability of complex tests with standalone centres – not only at the country level but also in regional markets. The shift was further accelerated by covid-19 pandemic, which significantly increased the demand for diagnostic testing, highlighting the importance of reliable and accessible diagnostic services. diagnostic chains, with their extensive networks and advanced infrastructure, positioned to handle the surge in testing volumes. The diagnostic chains could quickly scale up their operations, adhere to safety protocols, and provide accurate and timely results. Furthermore, their ability to provide home collection services and online report access during lockdowns made them more accessible and convenient for patients, which led to a significant increase in their market share.
Standalone centres:
Low entry barriers and the absence of stringent regulations have led to growth in standalone centres. these centres usually carry out basic tests that require minimal investment and space, however, some offer specialised tests such as mri, ct and positron emission tomography (pet) scan. They mostly have accreditations as a testimony of their expertise and quality of services.
Diagnostic tests are critical and drive 70% of medical decisions:
The diagnostics industry plays a pivotal role in preventing diseases by providing vital tools and services for early detection, accurate diagnosis and monitoring of several health conditions. According to the us centers for disease control and prevention (cdc), 70% of medical decisions depend on laboratory test results, indicating their importance in healthcare diagnosis. Furthermore, doctors usually prescribe multiple diagnostics tests such as blood tests, imaging scans and genetic screening for the early detection and monitoring of diseases. These tests not only help detect risk factors and diseases at an early stage, but also enable healthcare professionals to track disease progression, adjust treatment plans and provide personalised care. Hence, generally a single visit to the doctor leads to multiple diagnostic tests for proper treatment. moreover, the diagnostics industry assumes a crucial role in advancing proactive healthcare, especially in the postpandemic era. Diagnostic tests identify potential health issues through early detection of symptoms, enabling timely intervention and treatment and promotion of proactive healthcare practices. The outpatient department opd and ipd serve critical roles in healthcare delivery, catering to patients with varying medical needs. The opd acts as a primary interface for patients seeking non-emergency medical care, offering consultations, diagnostic tests and minor procedures. In contrast, the ipd provides comprehensive care for patients requiring hospitalisation, including intensive treatments, surgical interventions and post-operative care. Both departments are interconnected and rely on each other to ensure seamless patient care. in Opd and Ipd, Ecg tests aid in identifying heart issues such as blockages. In the Opd, Ecg is conducted during consultations to detect abnormalities such as st-segment changes or arrhythmias. Similarly, in the Ipd, ecg enables initial assessment of patients with symptoms of acute cardiac events. Ecg variations observed in both settings guide further diagnostic evaluation and treatment decisions, facilitating timely interventions for patients at risk of or experiencing heart-related complications. Pathology and radiology are integral components of both Opd and Ipd services, playing crucial roles in the diagnostic process. In the Opd, pathology and radiology services support diagnostic evaluations and treatment planning for patients with diverse medical conditions. Similarly, in the Ipd, these services play a vital role in disease monitoring, treatment assessment and surgical interventions.
Key growth drivers of the Indian diagnostics industry:
Ageing population: India is experiencing a demographic shift, with more people entering the older age bracket. The share of the population in the 60 and above year age bracket, which was just 7% in 2001, is expected to increase to 12% by2026. This trend is driven by factors such as increased life expectancy, owing to improved healthcare infrastructure and advancements in medical care.
Key risk factors for the Indian diagnostics industry:
Shortage of skilled labour there is considerable shortage of full-time doctors and staff in the diagnostics industry, due to which training and retention of seasoned employees has become critical for players. The situation is more critical for standalone diagnostic centres, which may not be able to employ well-trained lab technicians and pathologists, thereby affecting the quality of outcomes. This is essential, as accredited labs must mandatorily employ a full-time lab technician/phlebotomist and a radiologist. High cost of equipment diagnostic centres must constantly upgrade their technology to stay ahead of the competition and provide precise results. These upgrades not only involve significant capital investment, but also incur maintenance cost and require trained technicians, leading to higher overall cost. Furthermore, the capital intensity is higher for advanced radiology and molecular diagnostics, which require high-end equipment.
Recent trends in the diagnostics industry:
Adoption of technology in the diagnostics industry (in testing and delivery).
Inclusion of diagnostic tests in corporate health insurance plans.
Optimised disease detection through AI-assisted pathology and advanced robotics.
Conclusion:
ICICI Securities Ltd, Nuvama Wealth Management Ltd and SBI Capital Markets Ltd are the book-running lead managers to the issue. The equity shares are expected to be listed on BSE and NSE on December 6. The Suraksha Diagnostic IPO offers investors a chance to tap into the burgeoning Indian diagnostics industry, characterized by consistent growth and increasing demand for quality healthcare services. With its strong regional presence, integrated diagnostic offerings, and commitment to superior quality, Suraksha is well-positioned to capitalize on the industry’s shift toward organized diagnostic chains.
However, prospective investors should weigh the opportunities against the risks, such as high capital intensity and the competitive landscape. The company’s focus on expansion, technological advancements, and customer-centric services aligns with market trends, making it a potentially promising addition to a well-diversified portfolio. As always, a thorough evaluation of the IPO’s pricing and growth potential is essential before making an investment decision.
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://accounts.binance.com/pl/register-person?ref=YY80CKRN