Vijaya Diagnostic Centre Ltd IPO

Competitive Strengths:

Some of the competitive strengths are as follows

1.  Largest and fastest-growing diagnostic chain with dominant position in south India 

Vijaya Diagnostic center is the largest integrated diagnostic chain in southern India, by operating revenue, and also one of the fastest-growing diagnostic chains by revenue for the fiscal year 2020 (Source: CRISIL Report). The company has built an extensive operational network consisting of 81 diagnostic centers including a flagship center located at Hyderabad, and 11 co-located reference laboratories, including a national reference laboratory at their flagship diagnostic center, across 13 cities and towns in the states of Telangana and Andhra Pradesh and in National Capital Region and Kolkata, as of June 30, 2021. For the fiscal year 2021, the company derived 86.21% and 9.99% of revenue from operations from Telangana and Andhra Pradesh, respectively.

2.  Well-positioned to leverage the high growth in the Indian diagnostics industry

According to the CRISIL Report, the Indian diagnostics market was valued at ~₹710 billion to ₹730 billion in the fiscal year 2021, and is projected to grow at CAGR of around 12% to 13% to reach ~₹920 billion to ₹980 billion by fiscal year 2023 driven by rise in health awareness and disposable incomes, increase in demand for better healthcare facilities and quality of care of individuals, and increase in spending on preventive and wellness. The combination of Vijaya Diagnostic’s strong brand position driven by the long operating history in their core geographies, their extensive operational network and their reputation for providing quality diagnostic services positions them well to continue to grow the scale of their business in Telangana and Andhra Pradesh market and take advantage of growing Indian diagnostic market.

3.  Integrated diagnostics provider that offers a one-stop solution

Vijaya Diagnostic Centre offers a comprehensive range of approximately 1,610 pathology tests, which are organized into approximately 740 routine tests and 870 specialized tests, as well as approximately 220 basic and 320 advanced radiology tests that cover a range of specialties and disciplines, as of June 30, 2021. The company’s test menu includes (i) pathology tests ranging from basic biochemistry and clinical pathology to cytogenetics and high-end molecular diagnostic tests, including protein chemistry, cellular immunology, flow cytometry, genetics, cytogenetics, immunohistochemistry and advanced microbiology tests, and (ii) radiology tests ranging from basic echocardiograms, X-rays and ultrasounds to advanced radiology tests such as MRI, HRCT, SPECT and PET CT. Given the focus on the provision of integrated diagnostic services, Vijaya Diagnostic Centre has provided 2.8 tests per customer on the average fiscal year in fiscal year2020, which is higher than other listed regional/multi-regional diagnostic chains, according to the CRISIL Report. 

Risk Factors:

Some of the risk factors are as follows
1.    The business operations are concentrated in South India, and any loss of business in such a region could have an adverse effect on their business.
2.    Failure or malfunction of their equipment could adversely affect their ability to conduct their operations.
3.    The company may become subject to professional malpractice liability claims, which could be costly and, therefore, could negatively affect their business.

Vijaya Diagnostic Centre Limited 5paisa Review
 

Considering the future growth potential of healthcare industry, debt free company with plans for acquisition and expansions, diversified service offerings and strong technical capabilities of the company, we recommend ‘Subscribe’ to the issue with a long-term perspective.