Diagnostic stocks, which had been on a roll ever since the outbreak of covid have seen severe bear hammering in the last few weeks. Here is one diagnostic stock that is available at steep discount. It maybe a good time to buy stocks from the medical, diagnostic space like Medplus and Krsnaa Diagnostics.
Krsnaa Diagnostics: IPO price Rs 954, current market price Rs 460
This is one stock that is worth buying for investors and we tell you why a little later. The company came up with an IPO at a price of Rs 954 and the shares are now low trading at Rs 460, which is not even half the price. In fact, the issue over subscribed by a whopping 64 times and began listing at Rs 1025. At these levels the stock is a good buy, given the robust expansion plans, unique model of PPP and growing presence across the country.
Extremely impressive track record
Krsnaa Diagnostics is one of the fastest growing and differentiated diagnostic service provider with services including radiology, pathology and tele-radiology. Provides quality and inclusive diagnostic services at disruptive rates across various segments with a focus on Public Private Partnership model. The company also has one of India's largest tele-radiology reporting hubs in Pune with capability to scale process of X-rays, CT scans and MRI scans and serves patients in remote locations.
Solid PPP model
Government Hospitals basically invite open bids to operate diagnostic centre at their hospitals and prefers high quality service provider with lower rates as compared to market.
The company has one of the best public private partnership models, with various government and government institutions. In fact, it has long-term of contracts (between 5-10 years) with inbuilt price escalation mechanism ensures higher and consistent visibility of revenues. With the government slates to focus on investing in healthcare at under The company's customer base is driven by both patient's visiting government hospitals and direct walk-ins driven by relatively cheaper rates with best-in class infrastructure and timely reporting penetrated rural and municipal corporations will provide an impetus to public private partnership model.
1,905 dedicated centres across various states for the PPP model
The company now has 1,905 dedicated centres under PPP Model across 14 states. Annual price escalation in the range of 2-5%, is generally a part of PPP contract. The company sends its monthly invoices to government agencies and receivables days ranges between 60-90 days.
The company has also entered into strategic partnerships with private health players. 26 centres under Private Model across 2 states. 33% contribution to FY21 Revenues now comes from the private sector tie-ups. All the above information is as on Feb 2022.
Reasonable on valuations
The company has been reporting stellar growth every quarter. In fact, given the sharp fall in the share price, valuations for the company have turned attractive. Interestingly, the company has also repaid Total Principal Debt of Rs. 1,908 million in FY22 by utilizing Rs. 479 million funded from internal accruals and Rs. 1,429 million out of IPO proceeds.
The stock of the company is now available at a trailing p/e of 22 times. Looking at the robust growth outlook going ahead, we believe it is a good stock to buy for the long-term.