February 28, 2024

ICICI Securities research report on Vijaya Diagnostic Centre

Vijaya Diagnostic Centre (Vijaya) has acquired 100% stake in Pune-based PH Diagnostic Centre Private Limited (PH) for a cash consideration of INR 1,475mn (including INR 128mn for debt repayment). The business dynamics of PH Diagnostic are identical to Vijaya and can be swiftly integrated. Besides, PH’s ability of high end testing pertaining to allergy and genomic may also add new capabilities to the combined portfolio. The acquisition also addresses concerns on replicating Vijaya’s business model beyond Andhra/Telangana region as the share of these regions may come down to 89% in FY25E vs ~97% currently. We raise our EBITDA for FY24/25E by 2-8% to factor in this acquisition.

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The stock trades expensive at 21.8x FY25E EV/EBITDA, we retain our REDUCE recommendation. However, we raise target price to INR 590.

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Vijaya Diagnostic Centre – 23 – 12 – 2023 – isc