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    Krsnaa Diagnostics IPO: Should you subscribe to it at PE of 77x?

    Synopsis

    The IPO comprises a fresh issue worth Rs 400 crore and an offer for sale (OFS) of up to 8,525,520 shares by existing shareholders. The IPO is being sold in the price band of Rs 933-954, with asking valuations coming in at 77 times FY21 earnings per share.

    IPO 2
    If the issue is successful, the company would command a post-issue market cap of Rs 2,994 crore.
    NEW DELHI: The Rs 1,213 crore IPO of Krsnaa Diagnostics kicked off on Wednesday, along with three others, in one of the busiest days for the primary market investors.

    The IPO comprises a fresh issue worth Rs 400 crore and an offer for sale (OFS) of up to 8,525,520 shares by existing shareholders. The IPO is being sold in the price band of Rs 933-954, with asking valuations coming in at 77 times FY21 earnings per share. If the issue is successful, the company would command a post-issue market cap of Rs 2,994 crore.

    Anand Rathi said the asking valuations are lower than the industry average of 85.99 times on an FY21 earnings basis.

    "A strong balance sheet and healthy operating cash flows should enable the company to pursue growth opportunities and fund its strategic initiatives. Hence, we recommend a “subscribe” rating on the issue,” the brokerage said.

    The company on Tuesday allocated 56,28,937 shares to 44 anchor investors at Rs 954 apiece, aggregating to Rs 537 crore.
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    SUBMIT

    Krsnaa is a large and differentiated diagnostic service provider, which offers a range of technology-enabled diagnostic services such as imaging, pathology and teleradiology services to public and private hospitals, medical colleges and community health centres pan-India. The company focuses on the public-private partnership (PPP) diagnostics segment and has the largest presence in the diagnostic PPP segment.

    Religare Securities said Krsnaa is well placed to benefit from growing industry trends on the back of its scale, strong brand equity and extensive footprint across India.

    It said the company's PPP agreements, which deploy diagnostic centres for its radiology and pathology services, are typically long-term contracts that ensure visibility of revenues for its operations.

    The company plans to expand its network of diagnostics centres and diagnostic service offerings. It also plans to increase its digital footprint and continue to focus on improving profitability and efficiency.

    "The financial performance has been healthy for the company. With promising industry growth prospects coupled with a strong execution track record, we have a positive view on the company for the long term,” Religare said.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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