During the Covid-19 pandemic, the shareholders of healthcare and the allied sector companies made a killing as they were the topic of the town. Widespread need and manufacturing of medical equipments was on the rise as the virus spread across India. One such medical device manufacturing company, Skanray Technologies Limited is coming up with its IPO. So let us discuss in detail, the company’s business prospects.
About Skanray Technologies Limited
Skanray Technologies Limited is a key Indian medical device players which is engaged in designing, development, manufacturing, and marketing of medical devices. The company offers a diversified portfolio of products which include patient monitoring systems, cardiology devices, respiratory management systems, and radiology/imaging systems to hospitals and OEMs. In FY20, the company sold its products and services to over 1830 customers in 20 countries. The company also has an in-house research and development team that has been granted 27 patents, 49 trademarks, and 11 design registrations as of December 2020. The company was incorporated on February 14, 2007. The company entered into a licensing framework with Bharat Electronics Limited to manufacture 30,000 ventilators during the initial months of Covid-19 pandemic in India.
Skanray Technologies Limited IPO Details
Following are the details about the company’s IPO
- The issue will be a book building offer.
- The company has not yet decided the IPO subscription dates.
- The company has not yet come up with the IPO price range.
- The offer for sale is for 14,106,347 equity shares of ₹10 each.
Objectives of the IPO
Following are the objectives of the company’s IPO:
- The gross proceeds from the fresh issue will be upto ₹400 crores.
- The company will use the net proceeds from the issue towards funding inorganic growth and make investments into its subsidiaries.
- The company will also use a part of the proceeds towards funding its working capital and capital expenditure requirements.
- The company will also use a part of the proceeds towards general corporate purposes.
Key strengths
Following are the key strengths of the company:
- The company is well-positioned on a growing market by being a major player in the industry on the back of the government’s ‘Make in India’ program.
- The company has a well-diversified and a globally certified portfolio of products, classified into three broad categories.
- The company has proven research and development capabilities which are evident from its patent, trademark, and design registrations.
- The company has strong manufacturing and infrastructure capabilities. It has two facilities in India and one in Italy, and all facilities manufacture USFDA and CE certified products.
- The company has s strategic go-to-market approach with an extensive distribution network and longstanding customer relationships.
- The company also has an experienced and professional leadership team.
Key risks
Following are the key risks that the company faces in its business:
- The company is subject to extensive and dynamic medical device regulation. If the company does not meet these criteria, it may hinder the approval or sale of its products.
- The company faces intense competition and might not be able to keep pace with the rapid technological changes in the medical devices industry.
- The company’s future growth is dependent on the development of new products and enhancement of existing products.
- The company generated 60% of its total revenues from its top ten customers, which poses a concentration risk.
- The company also depends on central and state governments and related agencies for a significant portion of its business, which are awarded through competitive bidding process.
Fundamentals of the company
Following are the fundamentals of the company:
- The company’s revenue from operations increased from ₹166.9 crores in FY19 to ₹350 crores for the period ended December 2020.
- The company posted a loss of ₹29.4 crores in FY19, which turned into a profit of ₹132.7 crores for the period ended December 2020.
- The company’s earnings per share stood at ₹45.75 for the period ended December 2020.
- The company’s net asset value per equity share was ₹59.57 for the period ended December 2020.
- The company’s total borrowings decreased from ₹153.9 crores in FY19 to ₹66.4 crores for the period ended December 2020.
- The company’s total assets increased from ₹286 crores in FY19 to ₹348 crores for the period ended December 2020.
Peer comparison
According to its prospectus, there is no listed company which is engaged in a similar line of business as Skanray Technologies Limited. So a peer comparison in this regards will not be possible.
Conclusion
So this was all about the Skanray Technologies Limited IPO. Investors should wait for the company to come up with its IPO subscription dates and the IPO price to decide whether to subscribe in the company’s IPO or not. Also, investors should do their own due diligence on the company fundamentals before taking a decision.
