Dr Agarwal’s Health Care IPO Makes Tepid Market Debut: What Investors Need to Know

Shares of healthcare services provider Dr Agarwal’s Health Care made a tepid debut on Dalal Street on Tuesday, February 4, 2025. Dr Agarwal’s Healthcare shares listed at Rs 396.90 per share on the BSE, a discount of Rs 5.10 or 1.27% against the issue price of Rs 402.

On the National Stock Exchange (NSE), the company’s shares listed flat at Rs 402, the same as the issue price.

Dr Agarwal’s Health Care IPO listing largely aligned with analysts' and grey market expectations. According to Investorgain.com, the company’s shares were trading at Rs 398 in the unlisted market, down Rs 4 or 1% from the issue price.

The IPO is a book-built issue of Rs 3,027.26 crore, comprising of fresh issue of 0.75 crore shares aggregating to Rs 300 crore and an offer for sale (OFS) of Rs 6.78 crore shares aggregating to Rs 2,727.26 crore. It opened for bidding on January 29, 2025, and closed on January 31, 2025. The allotment for Dr Agarwal’s Health Care IPO was finalised yesterday, February 3, 2025.

Dr Agarwal’s Health Care IPO - Should You Buy, Sell or Hold?

Despite markets in a recovering mood, Dr Agarwal's Health Care's listing was in line with the market expectations with neutral and negative opening. The offer received modest subscription demand from all investors except QIB while other categories like NII, retail and employee quota were subscribed less than 100%. The listing is justified on the back of a 90% offer for sale (OFS) leaving less value for investors on the table.

“Considering the market mood, we recommend allotted investors to continue holding it for the long term despite knowing that post listing will invite short-term volatility, hence advice for non-allotted investors, to wait and watch for better pricing,” said Prashanth Tapse, senior VP (Research) at Mehta Equities.

Sagar Shetty, research analyst at Stoxbox, says that Dr Agarwal Health Care’s flat debut into the bourses was largely in line with expectations. The IPO saw a modest subscription rate of 1.49 times, with weak market sentiment and concerns over valuation weighing on investor interest. The concerns were further compounded by its lower profitability, and significant promoter exit via the offer for sale (OFS).

In FY24, the company’s revenue increased to Rs 1,332.15 crore from Rs 1,017.98 crore in FY23, with EBITDA rising to Rs 969.89 crore in FY24 from Rs 747,63 crore in FY23. The company reported a profit after tax (PAT) of Rs 140.57 crore in FY24, up from Rs 83.5 crore in the previous fiscal.

“We thus recommend investors to avoid investing into the shares in the short term and keep track of its performance in the upcoming quarter,” Shetty said.

The company aims to utilize the net proceeds from the fresh issue for the repayment/prepayment (in part or full) of certain borrowings and for general corporate purposes, including unidentified inorganic acquisitions.

Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Pvt Ltd, Jefferies India Private Limited, Motilal Oswal Investment Advisors Limited are the book-running lead managers of the Dr Agarwal's Healthcare IPO, while Kfin Technologies Limited is the registrar for the issue.

About the company

Incorporated in April 2010, Dr Agarwal’s Health Care Limited is a prominent healthcare company focused on advanced eye care services. Its corporate office is located at Buhari Towers, Moores Road, Chennai, Tamil Nadu.

The company’s flagship brand, Dr. Agarwal’s Eye Institute, operates through a network of domestic and international subsidiaries, including Dr. Agarwal’s Eye Hospital Limited and Aditya Jyot Eye Hospital Private Limited. It operates in countries like Ghana, Kenya, Mozambique, and Madagascar.

The company provides a wide range of eye care services, including routine eye check-ups, cataract surgeries, LASIK procedures, retina treatments, and corneal transplants. According to the CRISIL MI&A Report, Dr Agarwal's Health Care held a market share of approximately 25% of the total eye care service chain market in India during the financial year 2024.