KRSNAA DIAGNOSTICS LIMITED

Incorporated in 2008, Krsnaa Diagnostics Limited is a large and differentiated diagnostic service provider. The company provide a range of technology-enabled diagnostic services such as imaging (including radiology), pathology/clinical laboratory and tele-radiology services to public and private hospitals, medical colleges and community health centres pan-India. Since inception, the company have served more than 13 million patients. The company focuses on the public private partnership ('PPP') diagnostics segment and has the largest presence in the diagnostic PPP segment. Its PPP agreements are typically long-term in nature and ensure predictability of the revenues from operations. Its continued focus on this segment has led them to become a preferred partner for public health agencies, resulting in, since commencement of operations, 78.43% of all tenders (by number) they have bid for being granted to them. As of June 30, 2021, they have deployed 1,797 diagnostic centres pursuant to PPP agreements with public health agencies. In addition to the PPP segment, they have been growing their collaboration with private healthcare providers to operate diagnostic centres within their facilities, and have expanded from operating 12 diagnostic centres, as of March 31, 2018 to 17 diagnostic centres, as of March 31, 2020 and the company operated 26 such diagnostic centres as of March 31, 2021. In FY21 and Q1 FY22, the company served 5.18 millions patient and 1.88 millions patients, respectively. The company has an extensive network of integrated diagnostic centres across India primarily in non-metro and lower tier cities and towns. As of June 30, 2021, they operated 1,823 diagnostic centres offering radiology and pathology services in 13 states across India. As of June 30, 2021, the company had a team of 190 radiologists, 30 pathologists, 8 microbiologists and more than 2,800 qualified professionals including clinicians, technicians and operators. The company continues to make investments in equipment and in its technology platform, to ensure they meet requisite industry standards and accreditations like NABL and NABH. Their diagnostic equipments are procured from leading OEMs including Wipro GE Healthcare Private Limited, Siemens Healthcare Private Limited, Fujifilm India Private Limited, HORIBA India Private Limited and Agappe Diagnostics Limited. As per financial performance, Krsnaa has posted total income/net profits (loss) of Rs. 110.46 cr. / Rs. (60.08) cr. (FY18), Rs. 214.32 cr. / Rs. (57.99) cr. (FY19), Rs. 271.38 Cr. / Rs. (112) Cr. (FY20) and Rs. 661.48 Cr. / Rs. 184.90 Cr. (FY21). So company has posted consistent high growth in sales, but not able to make profits till FY20. In FY21, company has shown abnormal growth due to pandemic as seen across the sector. Company has posted an average EPS of Rs. 17.40 and average RoNW of 9.54% for last three fiscals. Issue is priced at a P/BV of 11.19 as per NAV of 85.27 on 31.03.21. As per FY21 earnings on fully diluted equity post issue, the IPO is priced at P/E of around 16. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, four BRLMs are associated with this IPO, and have handled around 39 IPO in last three fiscals. From last 10 IPOs, 3 are opened below issue price and remaining are opened above issue on the day of listing. As of now, one is trading below issue price and others are trading above issue price. ( As on 30.07.21) As per financials, company has shown good growth in sales, RoNW is 79% and P/E is around 16. So issue looks reasonably priced compared to peers. In current pandemic situation, diagnostic companies performed extremely well, so as situation will normalise, performance may decline. Performance of BRLM is good. So, we are giving SUBSCRIBE rating to this IPO for listing gains and long term.

• 1 Rajendra Mutha