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About the Company

Incorporated in 2010, Krsnaa Diagnostics Ltd. is one of the fastest growing diagnostic chains in India. It provides a range of technology-enabled diagnostic services such as imaging (including radiology), pathology/ clinical laboratory and tele-radiology services to public and private hospitals, medical colleges and community health centres pan-India. It has an extensive network of integrated diagnostic centres across India, primarily in non-metro and lower tier cities and towns. As of June 30, 2021, it operated 1,823 diagnostic centres offering radiology and pathology services in 13 states across India.

Krsnaa focuses on the public private partnership (PPP) diagnostics segment and have the largest presence in the diagnostic PPP segment. In addition to the PPP segment, it has been growing collaboration with private healthcare providers to operate diagnostic centres within their facilities, and have expanded from operating 14 diagnostic centres, as of March 31, 2019 to 26 such diagnostic centres as of June 30, 2021. It has a team of 190 radiologists, 30 pathologists, eight microbiologists and more than 2,800 qualified professionals including clinicians, technicians and operators. Since inception, the company has served more than 23 million patients.

Objects of the Issue

* Proposing to finance the cost of establishing diagnostics centers at Punjab, Karnataka, Himachal Pradesh and Maharashtra

* Repayment/pre-payment, in full or part, of borrowings from banks and other lenders availed by the company

* General corporate purposes

Valuation

The size of the diagnostic industry is estimated to be approximately Rs. 710 billion in FY21, registering a healthy CAGR of 13% to 14% over FY17-FY21, echoing the growth from healthcare delivery services. The industry is expected to grow at approximately 15% and achieve a value of Rs. 920 billion FY23. This would be led by increased demand for in-patient treatments and out-patients treatments. Moreover, as literacy rates and disposable incomes rise, individuals increasingly demand better healthcare facilities and quality of care, leading to high volume growth of in-patients and out-patient treatments. The rise in healthcare demand has also received a lift from the increase in urbanisation and lifestyle-related diseases, such as cardiac diseases, diabetes and cancer, prompting many healthcare-service providers to enhance their offerings in metropolitan areas and Tier-I and II cities.

Krsnaa is well placed to benefit from growing industry trends on the back of its scale, strong brand equity, and extensive footprint across India. Further, its PPP agreements, to deploy diagnostic centres for its radiology and pathology services are typically long-term contracts that ensure visibility of revenues for its operations. Going forward, the company plans to expand its network of diagnostics centres and also expand its offerings of diagnostic services. It also plans to increase its digital footprint and continue to focus on improving its profitability and efficiency. The financial performance has been healthy for the company. With promising industry growth prospects coupled with company’s strong execution track record, we have a positive on the company for long term.

Key risks:

* i) Fixed pricing for its diagnostic services under the agreement

* ii) Business is capital intensive

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