Dr Agarwal Health Care IPO is a fresh issue of equity shares worth Rs 300 crore by the company and an offer-for-sale of 6.95 crore equity shares by promoters and investors
The initial public offering (IPO) of Dr Agarwal’s Health Care opened for subscription on Wednesday, 29 January. The company plans to raise nearly Rs 3,027 crore. It is a fresh issue of equity shares worth Rs 300 crore by the company and an offer-for-sale of 6.95 crore equity shares by promoters and investors worth Rs 2,727 crore.
The issue will close for subscription on Friday, 31 January. The share allotment of the IPO is expected to be finalised on 3 February and the company is anticipated to list on stock exchanges on 5 February.
The company aims to use the proceeds from the issue to repay/prepay certain borrowings in part or full, for general corporate purposes, and for unidentified inorganic acquisitions.
The IPO's price band is fixed at Rs 382-402 and investors can bid for a minimum of 35 shares in one lot or multiples thereof.
Dr Agarwal’s Health Care has reserved nearly 50% of the issue for qualified institutional buyers, while non-institutional investors will have 15% of the allocation. Retail investors will get the remaining 35% of the net issue.
Kotak Mahindra Capital, Morgan Stanley India, Jefferies India, and Motilal Oswal Investment Advisors are the bankers managing the IPO.
Dr Agarwal's Health IPO was commanding a grey market premium (GMP) of Rs 12, as of 29 January 2025, 08:26 AM. With the price band set at Rs 402, the estimated listing price for the IPO is Rs 414. This suggests an expected gain of 2.99% per share on the listing day.
Analysts at Anand Rathi Research believe that the issue is richly priced and recommend a “Subscribe – Long Term” rating for the IPO. At the upper band, the company is valued at 134x its FY24 EPS. Following the issuance of equity shares, the company's market capitalisation stands at Rs 12,698.37 crore, with a market cap-to-sales ratio of 9.5 based on its FY24 earnings. The company has around 25% of its market share in its business of eye care-related services.
Rajan Shinde, research analyst at Mehta Equities Ltd says the issue brings investors an opportunity to invest in India’s largest eye care service chain by revenue in FY2024, holding a dominant 25% market share in the organized segment.
He added that the IPO comes with Rs 2,727 crore OFS which is almost 90% of total issue which is an area of concern for new investor. We believe India’s eye care market is expected to grow at a CAGR of 11.5%, reaching Rs 378 billion in FY2024, presenting significant opportunities for the company to deepen its footprint in underserved regions.
“We believe its organic growth strategy and focus on expanding the primary facility network position it well to capture this growing demand. Hence, looking at all attributes we recommend our investors to “subscribe” the issue for long term perspective only,” Shinde said.
According to analysts at Geojit Financial Services, at the upper price band of Rs 402, Dr Agarwal Healthcare is available at a P/E of 133.6 times (FY24), which appears expensive compared to peers. However, considering the company’s plans to expand its presence across India by establishing new facilities, strengthening its brand image and its consistent revenue growth over the years, we recommend ‘subscribe’ on a long-term basis, Geojit said in a research note.
In addition, the brokerage firms raised concerns that the majority of the company’s facilities are located in Chennai, Maharashtra and Karnataka. These three states account for 62% of total facilities.
Dr Agarwal’s Health Care held a 71.9% stake in the subsidiary Dr Agarwal’s Eye Hospital which was incorporated back in 1994. Dr Agarwal’s Health Care is the parent company of the listed company Dr Agarwal’s Eye Hospital. It offers a wide range of eye care services, including cataract, refractive, and other surgeries; consultations, diagnoses, and non-surgical treatments; and sells optical, contact lenses and accessories, and eye care-related pharmaceutical products.
According to the CRISIL MI&A Report, the company had a market share of around 25% of the total eye care service chain market in India during the Financial Year 2024. With a long-standing operational history, the company endeavours to address all the needs of its patients in their eye treatment journey through a network that, as of 30 September 2024, comprised 209 facilities.
As of September 2024, 737 doctors served its patients across its facilities. During FY24, it served 2.13 million patients and performed 220,523 surgeries. It served 1.15 million patients and performed 140,787 surgeries during the six months ended 30 September 2024.
(Disclaimer: The views expressed by the spokespersons in this article are their own and do not constitute financial advice.)