Suraksha Diagnostics IPO: An In-Depth Analysis
The initial public offering (IPO) of Suraksha Diagnostics Limited made its debut in the Indian primary market last Friday, generating considerable interest among investors. This public issue is set to remain open until December 3, 2024, giving potential investors a limited window to apply. The company has established a price band for its shares between ₹420 and ₹441, aiming to raise a substantial ₹846.25 crore through this offering, which is entirely an Offer for Sale (OFS). Notably, this means that the funds raised will not contribute to the company’s balance sheet, as they will go directly to the promoters who are offloading their stakes.
Market Response and Subscription Status
As the bidding process unfolded, the response to the Suraksha Diagnostics IPO has been lukewarm. In the initial days, the public issue was subscribed to only 25%, indicating a cautious approach from investors. By 3:00 PM on the third day of bidding, the overall subscription had improved to 1.00 times, with the retail portion at 0.76 times, the Non-Institutional Investors (NII) segment at 0.87 times, and the Qualified Institutional Buyers (QIB) segment booked at 1.52 times.
Interestingly, shares of Suraksha Diagnostics have been trading at par in the grey market, showing no significant premium or discount. This stability in the grey market reflects a cautious sentiment among investors, who seem to be weighing their options carefully.
Expert Opinions on the IPO
The question on many investors’ minds is whether they should apply for the Suraksha Diagnostics IPO. Financial analysts have varied opinions on this matter. Arun Kejriwal, the Founder of Kejriwal Research and Investment Services, expressed that the public issue appears expensive at its current valuation. He noted that while the company has completed its capital expenditure (CAPEX) for the next 18 to 24 months, it may be prudent for investors to wait for the share listing before making any investment decisions.
On the other hand, Shivani Nyati, Head of Wealth at Swastika Investmart, has assigned the IPO an ‘avoid’ tag. She pointed out that the company’s financial performance has been lackluster, particularly during the financial year 2022-23, although there are signs of recovery in FY24. Nyati emphasized that the valuations do not leave much room for potential gains for investors.
Additionally, other financial institutions like StoxBox and Anand Rathi have echoed similar sentiments, advising caution and labeling the IPO as one to avoid.
Conclusion
In summary, the Suraksha Diagnostics IPO presents a mixed bag of opportunities and risks. While the company aims to raise a significant amount through its public offering, the initial market response has been tepid, and expert opinions suggest a cautious approach. Investors are advised to conduct thorough research and consider consulting certified financial experts before making any decisions regarding this IPO. As the bidding period continues, the market will be watching closely to see how the situation unfolds, particularly as the listing date approaches.