Shares of West Bengal-based diagnostic chain Suraksha Diagnostic Ltd. made a weak debut on the exchanges on Friday, December 6, after listing at nearly 1% discount on the exchanges. The stock listed at ₹437 as against its initial public offer (IPO) price of ₹441 on the BSE. Similarly, on the NSE, the stock listed at ₹438, a discount of 0.68%.

Shivani Nyati of Swastika Investmart expected a moderate listing for Suraksha Diagnostics, with a potential gain of around 2-3% from the issue price.

Despite its presence in West Bengal and parts of the eastern region, the company’s financial performance has been inconsistent, including a setback in FY23, though some recovery is evident recently, Nyati said.

The IPO is a complete offer for sale, with no proceeds benefiting the business directly, and its valuation appears aggressive, particularly when compared with competitors that have a broader geographic presence and stronger financials.

Given the company’s limited scale, geographic concentration, and ongoing volatile market conditions, a cautious approach is advisable, Nyati said, adding that investors may find better opportunities among established players in the diagnostics sector.

The IPO received modest interest with a subscription of 1.27 times, getting fully subscribed on the final day.

The company sold its shares in a fixed price band of ₹420-441 for its IPO, through which it has raised ₹846 crore.

The IPO is entirely an offer for sale (OFS), which will comprise sale of up to 19,189,330 equity shares by selling shareholders.

Since the IPO is an OFS, the entire proceeds will go to the selling shareholders.

Ahead of the IPO opening, Suraksha Diagnostic has raised ₹253.87 crore from 12 institutional investors, including, Nippon Life India, Kotak Mutal Fund, Aditya Birla Sun Life Trustee, and Quant Mutual Fund, among others.

Incorporated in 2005, Suraksha Diagnostic offers pathology, radiology testing and medical consultancy services. The company has a central reference laboratory with 8 satellite laboratories and 215 customer touchpoints, including 49 diagnostic centres and 166 sample collection centres as of June 30, 2024, across West Bengal, Bihar, Assam, and Meghalaya.

Suraksha Diagnostic plans to invest ₹70 crore every year for the next three-four years to open four-five big centres and 10-12 smaller centres every year. This would be funded from internal accruals.

In financial year 2024, Suraksha’s revenues improved to ₹219 crore as against ₹190 crore in the year-ago period. Meanwhile profit after tax grew multifold to ₹23 crore.

ICICI Securities Ltd, Nuvama Wealth Management Ltd and SBI Capital Markets Ltd were the book running lead managers to the IPO, while Kfin Technologies Ltd was the registrar.