Vijaya Diagnostic sees a tepid listing, increases by over 16%

• Shares of Vijaya Diagnostic listed on the stock exchanges at ₹540 per share, which is less than 2% higher than the issue price.
• However, the stock jumped over 16% compared to the price at which shares were allotted during the IPO.
• The company’s initial public offer (IPO) was oversubscribed by over 4 times.
• It intends to use the proceeds of the IPO towards deepening its presence in Andhra Pradesh and Telangana, apart from expanding into East India.

Shares of Vijaya Diagnostic, one of the two new companies to get listed on the Indian stock exchanges, debuted at ₹540 per share, which is less than 2% above its issue price of ₹531.

The Hyderabad-based diagnostics company has a strong presence in southern India in the states of Andhra Pradesh and Telangana. It intends to expand in some eastern states primarily through acquisition, thanks to the IPO proceeds.

Vijaya Diagnostic says it has a market share of 7% in its home market – Andhra Pradesh and Telangana. Going forward, it looks to capture close to 20% of it. The market size of the business in both states is worth ₹5,100 crore, Kondapally said in the interview.

Over 96% of the Vijaya Diagnostic’s revenue comes from Hyderabad, the rest of Telangana, and the Andhra Pradesh region.

As of 2:10 p.m., Vijaya Diagnostic’s shares were trading at ₹619 per share, which is up by nearly 16.6%.

The grey market premium for Vijaya Diagnostic’s shares was hovering around ₹5, which translates to approximately 1% of the issue price of ₹531. It is worth noting that grey market premium is not an official measure of market premium.

The diagnostics company’s business model is different from that of similar listed diagnostics companies -- Metropolis Lab, Dr Lal PathLabs.

“Right from inception our focus has been to offer both radiology, pathology and imaging all under one roof so that the patient does not have to visit any other place. In that sense we are quite different as all our centres offer these services. 93% of our revenue comes from business-to-consumer (B2C) business whereas other players have more of [a] business-to-business (B2B) model,” said Sunil Chandra Kondapally, executive director at Vijaya Diagnostics in an interview with Business Insider.

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