Stocks To Buy: Diagnostic Stock Available At 52-Week Low, Dropped 57% From Highs

Krsnaa Diagnostics: Stock at 52-week low

The shares of Krsnaa Diagnostics has fallen from 52-week highs of Rs 1099 to the current levels of Rs 467, resulting in a sharp fall of more than 57%. At these levels the stock remains a very interesting pick. At a time when the markets are rising, this stock is falling, thus significantly under performing the markets. However, should the markets fall sharply, this stock could be more resilient, given the fact that it caters to the healthcare sector and has fast growing plans ahead.

A major presence and huge expansion

Krsnaa Diagnostics is a leading diagnostics company with the largest Private-Public Partnerships and is present in 14 states and 1800+ locations across the country. The company has in the past been a major player to attract venture capitalists and has outlined great plans for future expansions. , it has maintained robust EBITDA margin (better than leaders). According to a report by JM Financials, Krsnaa recently won tenders in Uttar Pradesh, Chandigarh, Himachal Pradesh (pathology) and Tripura in addition to existing tenders it won in Maharashtra, Punjab, Himachal and Karnataka.

Possibility of share price doubling is real

Given the way the share price has fallen, there is an immense scope for an upisde as well. "We believe the aforesaid wins will add INR 2 bn+ in revenue and expand EBITDA margin above 30% in FY24. At c.14x FY24E EPS, the valuations are at a significant discount to peers. We assign a multiple of 24x (vs. 46x of Dr Lal given Krsnaa's high PPP tender execution risk) to derive a Price Target of Rs 930 as the company is set to be the best performer of the sector," JM Financials has said in its report last month.

Buy on declines is a good strategy

Buying the stock on declines at the current levels is not a bad idea. However, over the last few quarters, we have seen the share price of Krsnaa Diagnostics falling a great deal and hence we believe that there could be a cap to any further sharp downside. The stock is trading with low volumes and hence small quantity of buying in the shares is recommended. Investors with a long-term view can buy the shares.