Companies
Neuberg Diagnostics aims IPO by end of FY23
Summary
Neuberg Diagnostics plans to spend ₹500 crore to expand its network in India. It is looking to expand overseas too.MUMBAI : Healthcare veteran G.S.K. Velu’s diagnostic chain Neuberg Diagnostics plans to spend as much as ₹500 crore to expand its network in India. The diagnostic chain is also looking to expand its overseas presence. In an interview, Velu, chairman and managing director of Neuberg Diagnostics, said that the company would look at an initial share sale by the end of June. Edited excerpts:
How does Neuberg Diagnostics plan to scale up its non-covid business?
Neuberg is heavily focusing on new-generation technology and testing, i.e. genomics, proteomics, and metabolomics, along with routine testing. We are witnessing 80% of revenue from conventional testing and 20% from new-generation testing. We are the only laboratory chain with a direct presence in the US, with a focus on genomics and newborn screening segments. To scale up the non-covid business, we are focusing on advanced diagnostics with development in new generation tests and moving to new geographies like northern and eastern regions in India.
What are your expansion plans in India and abroad?
We have made several acquisitions, including Bengaluru-based Anand Diagnostics, Ahmedabad-based SupratechMicropath, Pune-based A.G Diagnostics, Chennai-based Ehrlich Lab, and a few others in India and abroad. We are planning to invest around ₹500 crore towards business expansion as we are planning to venture into the northern and eastern regions in India and overseas markets through organic and inorganic routes. As one of the top four path lab chains of Indian origin, the company has a pipeline of 100 such centres in this fiscal. In addition, we have committed to invest ₹200 crore in FY23 for other expansion initiatives in Tamil Nadu. We also want to expand our presence in the Middle East and Africa. Our strategic expansion plan focuses on new generation techniques and expands our footprint in the international market.
What is the investment plan?
We are looking to invest ₹400-500 crore in the current fiscal and at the beginning of the next fiscal. This investment will be towards our business expansion as well as investment in technology advancement. The ₹900-crore Neuberg Diagnostics remains debt-free, has been funding acquisitions through internal accruals, and has grown threefold in four years. It has over 150 laboratories, of which 20 are located overseas, including West Asia and the US. Of the remaining about 130 labs, a majority are in South and West India. Plans are in place to expand up to 200 over the next few years.
We are among the leading diagnostics service providers in Karnataka, Gujarat, Tamil Nadu and Pune, with a major portion of revenues coming in from these states. We are also planning to expand in north India and are open to acquisitions in this region.
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What are your IPO plans?
We are planning an IPO by the end of the fiscal year or during the first quarter of FY24, depending on market conditions. In addition, we are aiming to ramp up our presence in the US, Latin America, and West Asia through our super-speciality genomics testing solutions.
We are working on the DRHP (draft red herring prospectus) and other details, including finalizing a merchant banker. We are also planning to merge some subsidiaries with the parent firm, Neuberg, and the scheme of arrangement will be filed shortly with NCLT, Chennai. As soon as the processes gets over, we will proceed with the IPO. We will use part of the IPO proceeds to expand facilities in India. We are also open for pre-IPO fundraising in case there is a delay in going for listing.
What are the potential markets you can expand into?
We are now expanding in Kerala, Andhra Pradesh, Telangana, NCR, Madhya Pradesh and West Bengal. We are also planning for an expansion in states such as Chhattishgarh, Odisha and the northeastern states. Our expansion plans include the Middle East, Africa and Latam countries.
What is the revenue contribution from Indian and abroad businesses?
Though we have a presence across the country, we dominate the southern and western markets in five-six states.
Currently, 80% of our lab network in India is located in the south and west regions, contributing over 85% of the revenue. North and east contribute less than 5% to overall revenue. We are also planning to scale it up to 10% and grow it further over the years. We are also looking at M&A opportunities in these regions and currently evaluating 10-15 opportunities across the country. Our international business contributes to about 10% of our revenues; we expect this to go up to 20%. Neuberg’s focus will be on the curative segment.
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