Wed Nov 27 07:48:54 UTC 2024: ## Suraksha Diagnostic IPO: Risky Investment Despite Wide Network

**Mumbai, India –** Suraksha Diagnostic Ltd., a West Bengal-based diagnostic services provider, is preparing to launch its Initial Public Offering (IPO). However, financial analysts at Dalal Street Investment Journal (DSIJ) strongly advise against investing.

The IPO, an offer for sale meaning the company itself will not receive proceeds, will see promoters Dr. Somnath Chatterjee, Ritu Mittal, and Satish Kumar Verma reduce their stake from 44.02%. Suraksha offers a comprehensive range of pathology and radiology tests, operating across West Bengal, Bihar, Assam, and Meghalaya through a network of one central laboratory, eight satellite labs, and 215 customer touchpoints. The company conducted 1.58 million tests in the quarter ending June 2024.

Despite a strong initial performance, the company experienced a significant decline in revenue (14%) and net profit (over 70%) in FY23, which hasn’t fully recovered. While the June 2024 quarter shows potential for growth, sustainability remains questionable. Although the company has reduced debt considerably, high finance costs and depreciation continue to impact profitability.

DSIJ cites several concerns: the IPO’s aggressive pricing (P/E ratio of 74x, P/BV ratio of 12.57 times), the relatively low promoter stake, and the concentration of over 95% of revenue in West Bengal, creating significant geographical risk. Compared to peers, Suraksha offers lower returns at a higher valuation. Considering the inconsistent financial performance and market uncertainties, DSIJ concludes the IPO is a risky investment and recommends investors avoid it. The Sensex and Nifty are currently up marginally.

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