Suraksha Diagnostic Share Price Highlights: Stock ends at ₹417.05 apiece on NSE, 5.4% discount to IPO price

Suraksha Diagnostic share price ended listing day at ₹417.05 on NSE, a 5.4% discount to the IPO price of ₹441, and at ₹417.95 on BSE, a 4.36% discount.

Suraksha Diagnostic Ltd, an integrated diagnostic chain, announced on Thursday that it has raised ₹254 crore from anchor investors, just one day before the public subscription for its initial share sale opens.

The leading anchor investors in this IPO include Nippon India Mutual Fund, Kotak Mutual Fund, Aditya Birla Sun Life Mutual Fund, Quant Mutual Fund, and the Carnelian Bharat Amritkaal Fund, as stated in a circular published on the BSE's website.

The company has allocated 57.57 lakh equity shares to 16 funds at a price of ₹441 per share, which is the upper limit of the price band. This transaction totals ₹254 crore, according to the circular.

The company diagnostic centre operations are aided by the technology platforms and systems used to streamline, such as Laboratory Information Management System (LIMS), fully integrated Radiology Information Systems (RIS) - Picture Archive and Communication Systems (PACS) and Enterprise Resource Planning (ERP) system. These enable the company to streamline operations, reduce the margin of error, allow cross-locational functioning, and efficiently utilize resources.

As per red herring prospectus (RHP), the company's listed peers are Dr Lal PathLabs (with a P/E of 77.08), Metropolis Healthcare (with a P/E of 89.61), Thyrocare (with a P/E of 65.52), and Vijaya Diagnostic (with a P/E of 86.40).

On the financial front, the company has delivered a Revenue CAGR growth of 20.9% between FY2022-24. As of FY24, Suraksha garnered a market share of ~1.15%-1.30% in its core eastern India market and aims to expand its presence in the northeastern markets further.

The stock was trading at ₹422.40 per share on NSE, marking a 3.56% decrease at 14:03 IST, and at ₹422.00 per share on BSE, showing a nearly 3.43% decline.

Suraksha Diagnostic has implemented a cluster-based ‘hub and spoke’ model, whereby samples are collected from multiple locations within a cluster for delivery to laboratories for diagnostic testing. The company also focuses on a customer-centric approach to delivering our services, leading to high customer satisfaction and increasing customer retention. 

Suraksha Diagnostic stands out as an innovative, technology-driven diagnostic chain. The company excels in delivering integrated solutions for pathology and radiology services, along with medical consultancy, through its extensive operational network.

With a diverse range of over 2,300 tests spanning multiple specialties and disciplines, Suraksha Diagnostic is well-equipped to meet a variety of healthcare needs. Additionally, the company enhances patient experience by offering both online and offline medical consultation services. Operating 43 diagnostic centers that feature 120 polyclinics, Suraksha Diagnostic employs a team of more than 750 doctors, ensuring that customers receive comprehensive, high-quality care in a convenient setting.

The stock was trading at ₹422.90 per share on NSE, marking a 3.45% decrease at 13:01 IST, and at ₹423.45 per share on BSE, showing a nearly 3.10% decline.

• The diagnostics industry in India is highly competitive and comprises several listed and private players across all verticals, presenting the company with a challenge to gain market share and profitability. Accordingly, competitors may access more significant financial resources, research and development investment, and marketing. Hence, if the company fails to compete effectively with other healthcare service providers, it may adversely impact profitability and operations.
• The company has a presence across 12 cities and towns in India, including West Bengal, Bihar, Assam, and Meghalaya. However, most of its operations are concentrated in West Bengal, with the state accounting for ~95% of the total revenues. Thus, the regional slowdown in economic activity in West Bengal or any other developments may adversely impact the company’s business.

• Diagnostic chain in eastern India is well positioned to leverage growth opportunities.
• Technologically advanced clinical infrastructure and trained personnel providing diagnostic services.

According to Prathamesh Masdekar, Research Analyst, Stoxbox, Suraksha Diagnostic was listed on the bourses today at a discount of 1%. The discount reflected the tepid demand it had garnered during the subscription period.

Suraksha garnered a market share of ~1.15%-1.30% in its core eastern India market and aims to expand its presence in the north eastern markets further. The company provides pathology and radiology testing services, with revenue primarily concentrated in West Bengal. 

Its financial performance has been inconsistent, with a setback in FY23, but it has recently shown signs of recovery. Suraksha Diagnostic is highly valued at the upper price band compared to its peers. We thus recommend that investors who have been allocated shares hold on to the shares and closely watch how the company performs in the upcoming quarters.

The stock was trading at ₹420.70 per share on NSE, marking a 3.95% decrease at 11:54 IST, and at ₹420.70 per share on BSE, showing a nearly 3.73% decline.

We need to understand a couple of things. One is that the response to the IPO itself was muted, and the reason for that was that the company appeared to be expensively priced. So, the muted response is also reflected in the poor listing. It has listed marginally below the issue price, which is closer to the high and now its trading marginally lower to the intraday low (3% below the issue price). The price is neither here nor there. It's not giving any clear indication of what it wants to do. Because the issue was expensive at the IPO, it has not become cheaper now after listing. So allow the shares to find their own level and decide to enter the share if you like the business after a week. If you are unsure about the business, wait for the company to declare the results before you take a call.

The company also offered a comprehensive range of 2,300+ tests covering various specialties and disciplines. Its diagnostic test menu included 788 routine pathology tests ranging from basic biochemistry and haematology to 664 specialized pathology tests such as advanced biochemistry, histopathology, and molecular pathology. The company provides 766 basic/intermediate tests in radiology, ranging from essential X-rays and ultrasonography to 119 advanced tests, including MRI and specialized CT scans, as of June 30, 2024.

The net proceeds from the fresh issue will be used towards the following purposes: • The issue is completely offer for sale; • General corporate purposes.

The stock was trading at ₹431.50 per share on NSE, marking a 1.48% decrease at 10:59 IST, and at ₹431.60 per share on BSE, showing a nearly 1.24% decline.

According to Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, Suraksha Diagnostics, a regional player in the pathology and radiology services, made a disappointing debut on the stock market, listing at ₹438 per share, a 0.68% discount to its issue price of ₹441. The IPO, which was moderately subscribed 1.27 times, failed to live up to pre-listing expectations, despite a modest grey market premium of ₹13.

The company's limited geographic presence, inconsistent financial performance, and aggressive valuation likely contributed to the subdued listing. Investors should approach this stock with caution and carefully consider the company's future prospects, especially in light of the competitive landscape.

Investors who are holding a position in this are suggested to keep a stop loss at around 400.

Suraksha Diagnostic share price made a tepid debut on the bourses today. On NSE, Suraksha Diagnostic share price opened at ₹438 per share, 0.68% lower than the issue price of ₹441. On BSE, Suraksha Diagnostic share price today opened at ₹437 apiece, down 0.91% than the issue price.

Suraksha Diagnostic shares will be a part of Special Pre-open Session (SPOS) on Friday, December 6, and the stock will be available for trading at 10:00 AM.

“Trading Members of the Exchange are hereby informed that effective from Friday, December 6, 2024, the equity shares of SURAKSHA DIAGNOSTIC LIMITED shall be listed and admitted to dealings on the Exchange in the list of ‘B’ Group of Securities,” a notice on BSE said.

Suraksha Diagnostic IPO reserved not more than 50% of the shares in the public issue for QIB, not less than 15% for NII, and not less than 35% of the offer is reserved for retail investors.

Suraksha Diagnostic IPO price band was set in the range of ₹420 to ₹441 apiece of the face value of ₹2. Bids could be placed for multiples of 34 shares, or at least 34 shares.

Suraksha Diagnostic Ltd. received a subscription rate of 1.27 times, indicating moderate investor interest. The company is set to debut on the stock exchange on December 06, 2024, and currently has a GMP of 2% with a stable performance outlook. Suraksha Diagnostic is highly valued at the upper price band compared to its peers. We thus recommend that investors who have been allocated shares hold on to the shares and closely watch how the company performs in the upcoming quarters

Suraksha Diagnostics, primarily operating in pathology and radiology services with revenue concentrated in West Bengal, is set to list on the stock market. The IPO received modest interest with a subscription of 1.27 times, getting fully subscribed on the final day. With a grey market premium (GMP) of ₹13 (approximately 2.95%), it indicates the potential for a decent listing gain of 2-3%.

Suraksha Diagnostic IPO GMP today is +13. This indicates Suraksha Diagnostic share price were trading at a premium of ₹13 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Suraksha Diagnostic shares was ₹454 apiece, which is 2.95% higher than the IPO price of ₹441.

Following the analysis of grey market activities from the past 12 sessions, it is clear that today's IPO grey market premium (GMP) is on the rise, signaling a robust listing ahead. According to experts at investorgain.com, the lowest GMP recorded is ₹0, while the highest stands at ₹13.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.