Chittorgarh.com Logo
Loading...

Nidan Lab NSE SME IPO review (Avoid)

Review By Dilip Davda on Oct 25, 2021

•    NLHL is trying to encase the boom for diagnostic segment fancy witnessed post-pandemic.
•    Based on financial parameters, the asking price is much high.
•    Sustainability of such margins in a highly fragmented and competitive sector is a concern.
•    There is no harm in ignoring this issue. 

ABOUT COMPANY:
Nidan Laboratories and Healthcare Ltd. (NLHL) was established as a Proprietary Firm in 1994 by Promoter- Dr Nitin Vithalrao Throve in the Northern District of Mumbai where diagnostic services were provided under one roof at reliable and affordable prices. The business was carried out under sole proprietorship, which was later taken over by the Company in 2000. From the year 2000, it expanded the diagnostic's business by setting up various centre's within the Northern District of Mumbai and Pune and Southern District of Pune. As of this date, 30 diagnostics cum collection centres are operational under the brand name of "Nidan Healthcare" and offer radiology, neurology, cardiology, dental as well as pathology services. 

Out of the 35 Centre's, 16 centres are under the Franchisee model where 1 centre acts as a fully operated diagnostic centre and 15 centre's act solely as standalone collection centres. It provides integrated diagnostics services to more than 1 million patients per year. Since 2000, private and government hospitals have been using its services and diagnostics centres for various pathology and radiology tests. After more than a decade of experience, NLHL has successfully set diagnostics centre in Asian Heart Hospital, Mumbai under the name of "Asian Nidan Imaging Centre". To enable its patients to easily distinguish pathology and radiology services, the company introduced "NIDANPATH" and "NIDAN DIAGNOSTICS" respectively in the year 2017. As of March 31, 2021, it offers a comprehensive range of approximately 740 routine and 3000 specialized pathology tests and approximately 220 basic and 320 advanced radiology tests that cover a range of specialities and disciplines.

As of March 31, 2021, NLHL's diagnostic services are provided by a medical professional team consisting of 94 laboratory doctors, radiologists, physicians and 256 well-trained technical staff in an operational network. As of June 30, 2021, all of its centres are having Pre-Conception and Pre-Natal Diagnostic Techniques ("PCPNDT") accreditations.

The Company intends to introduce online Health Care Consultancy Services, Health Care Services (Medical), Hospital and Diagnostic Services under the brand name "HEALTHEXPEDIA", "TRUFIT CLINIC" and "NIDAN HEALTHMALL". Over the next 5 years, NLHL intends to set up more centres PAN India, either by acquiring brownfield projects especially in Rajasthan, Punjab or by using the "Hub and Spoke model" within the Metro cities of India.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for repayment of loans (Rs. 16 cr.), additional working capital (Rs. 26 cr.) and general corporate expenses (Rs. 4.40 cr.) NLHL is coming out with a maiden IPO of 4000000 shares of Rs. 10 each at a fixed price of Rs. 125 per share to garner Rs. 50 cr. The issue opens for subscription on October 28, 2021, and will close on November 02, 2021. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.78% of the post issue paid-up capital of the company. NLHL is spending Rs. 3.60 cr. for this IPO process.  

The issue is solely lead managed by First Overseas Capital Ltd., Bigshare Services Pvt. Ltd. is the registrar and NNM Securities Pvt. Ltd. is the market maker. 

The company has issued entire equity shares at par so far. The average cost of acquisition of shares by the promoters is Rs. 10 per share. 

Post issue, NLHL's current paid-up equity capital of Rs. 9.90 cr. will stand enhanced to Rs. 13.90 cr. Based on IPO pricing, the company is looking for a market cap of Rs. 173.75 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, NLHL has posted turnover/net profits of Rs. 20.97 cr. / Rs. 0.22 cr. (FY19), Rs. 22.19 cr. / Rs. 0.71 cr. (FY20) and Rs. 21.85 cr. / Rs. 2.30 cr. (FY21).  For the first quarter of FY22 ended on June 30, 2021, it has earned a net profit of Rs. 1.09 cr. on a turnover of Rs. 7.85 cr. Thus scale-up in the bottom line is surprising and is the major concern as the segment in which this company is working is fragmented and highly competitive. 

For the last three fiscals, NLHL has posted an average EPS of Rs. 1.44 and an average RoNW of 0.11%. The issue is priced at a P/BV of 8.59 based on its NAV of Rs. 14.56 and at a P/BV of 2.70 based on its post-issue NAV of Rs. 46.34.

If we annualise its super earnings of FY22 on fully diluted equity capital, then the asking price is at a P/E of 39.81. Thus the issue is highly-priced based on its financial parameters and considering near term perspectives. The sustainability of such margins going forward is a major concern. 

DIVIDEND POLICY: 
The company has not declared any dividend since its incorporation. It will adopt a prudent dividend policy post listing based on its financial performance and the future prospects

COMPARISON WITH LISTED PEERS:
As per offer documents, NLHL has shown Metropolis Healthcare and Dr Lal Path as its listed peers. They are currently trading at a P/E of 59.44 and 75.38 (as of October 25, 2021). However, they are not truly comparable on an apple to apple basis. NLHL is way behind its peers in financial parameters. Recent listings of Krsnaa Diagno (11.89 P/E) and Vijaya Diagno (70.81 P/E) failed to live up to confidence. SME IPO of in this segment from Dr Lalchandani Lab (11.37) s still quoting at discount. 

MERCHANT BANKER'S TRACK RECORDS: 
This is the 10th mandate from First Overseas in the last four fiscals (including the ongoing one). Out of the last 9 listings, 1 opened at discount, two at par and the rest with premiums ranging from 1.4% to 139.2% on the day of listing. The last mandate of BEW posted the highest gains on listing day, but it cannot be considered as a benchmark.


Conclusion / Investment Strategy

For the last three fiscals, Nidan Laboratories top line remained static, but profit margins improved with a sharp rise for FY21. It has expressed similar trends for FY22 Q1, but the sustainability of such margins going forward is a major concern as the segment is highly fragmented and witnessing a cutthroat competition. Due to pandemics, these segments gained fancy and perhaps this company is trying to encase on this boom. Based on financial parameters the asking price is high. Hence there is no harm in ignoring this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Oct 25, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Nidan Laboratories and Healthcare IPO FAQs

  1. 1. Why Nidan Laboratories and Healthcare IPO?

    The initial public offer (IPO) of Nidan Laboratories and Healthcare Limited offers an early investment opportunity in Nidan Laboratories and Healthcare Limited. A stock market investor can buy Nidan Laboratories and Healthcare IPO shares by applying in IPO before Nidan Laboratories and Healthcare Limited shares get listed at the stock exchanges. An investor could invest in Nidan Laboratories and Healthcare IPO for short term listing gain or a long term.

  2. 2. How is Nidan Laboratories and Healthcare IPO?

    Read the Nidan Laboratories and Healthcare IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Nidan Laboratories and Healthcare IPO what should investors do?

    Nidan Laboratories and Healthcare IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Nidan Laboratories and Healthcare IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Nidan Laboratories and Healthcare IPO good?

    Our recommendation for Nidan Laboratories and Healthcare IPO is to avoid.

  5. 5. Is Nidan Laboratories and Healthcare IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Nidan Laboratories and Healthcare IPO.

  6. 6. When will Nidan Laboratories and Healthcare IPO allotment status?

    The Nidan Laboratories and Healthcare IPO allotment status will be available on or around Nov 9, 2021. The allotted shares will be credited in demat account by Nov 11, 2021. Visit Nidan Laboratories and Healthcare IPO allotment status to check.

  7. 7. When will Nidan Laboratories and Healthcare IPO list?

    The Nidan Laboratories and Healthcare IPO will list on Friday, November 12, 2021, at NSE SME.

1 Comments

1. BhavyaDhiman  Oct 26, 2021 11:18:53 AM I Like It. | Report Abuse Reply
Sir you had written MAY Apply for Paras Defense IPO and it was listed with 160% gains. What makes you soo confident about your own reviews? Most of the comments on your websites are done by your own team or bots, you dont have any clue about IPO analysis. You just bluff random stuff and call yourself an expert. I can prove that you do paid reviews-
Day 1- Aashka Hospitals BSE SME IPO review (AVOID)
Day 3- Aashka Hospitals BSE SME IPO review (MAY APPLY after you got money)

Shame on you for cheating innocent retailers.