Vijaya Diagnostic IPO: Information analysis

Started in 1981, Vijaya Diagnostic Centre is now one of the largest diagnostic centres in South India. It offers Pathology and Radiology services to its customers in Telangana and Andhra Pradesh. It also has a minor presence in Kolkata through its subsidiary Medinova Diagnostic Service, which it acquired in 2014. The company offers integrated pathology and radiology services to its customers. It has a comprehensive range of 740 routine and 870 specialised pathology tests, and approximately 220 basic and 320 advanced radiology tests covering various specialities and disciplines. All of this is done through its 81 diagnostic centres and 11 reference laboratories. It also offers a broad spectrum of health and wellness packages to the customers as per their requirements. According to a CRISIL Research report, the Indian diagnostic industry is set to grow at 12-13 per cent CAGR until 2023. South India has a 27-29 per cent market share, of which Andhra Pradesh and Telangana together account for 44-46 per cent. Vijaya Diagnostics has a strong presence in these two states thanks to their well-structured hub-and-spoke model. The company has one main hub centre and various other reference centres known as spokes, wherein specimens are collected across multiple locations and sent to the main hub for diagnostic testing. Strengths The company uses a hub-and-spoke model, which increases logistical efficiency, thus gaining greater economies of scale. This model also establishes them in their operating locations. The company has some of the best numbers in the industry with Rs 1,214 operating income per patient and a 78 per cent cash conversion, which means it can convert most of its operating revenue to cash immediately, helping them maintain high cash and liquidity. As an integrated diagnostic player, the company offers its customers a one-stop solution for basic to advanced pathology and radiology testing services. Weaknesses It has a geographically concentrated business, with 86 per cent of the company's revenue coming from the state of Telangana. The lack of geographical expansion may hinder its growth in future. Even though the diagn