
The initial public offering (IPO) of Dr Agarwal's Health Care kicks-off for bidding today, that is, Wednesday, January 29. The healthcare service provider is offering its shares in the range of Rs 382-402 apiece, which can be applied for a minimum of 35 equity shares and its multiples thereafter. The issue will close for bidding on Friday, January 31.
Incorporated in 2010, Chennai-based Dr Agarwal's Health Care offers a comprehensive range of eye care services, including cataract and refractive surgeries, consultations, diagnoses, non-surgical treatments, and the sale of optical products, contact lenses, accessories, and eye care-related pharmaceutical items.
The Rs 3,027.26 crore IPO of Dr Agarwal's Health Care includes a fresh share sale of Rs 300 crore and an offer-for-sale (OFS) of up to 6,78,42,284 shares worth Rs 2,727.26 crore by its promoters and existing shareholders. Net proceeds from the issue shall be utilized towards repayment/prepayment of the borrowings; general corporate purposes; and unidentified inorganic acquisition.
Ahead of its IPO, Dr Agarwal's Health Care raised Rs 875.5 crore via anchor book as it allocated 2.17 crore shares at Rs 402 apiece. Its anchor book included names like Goldman Sachs, Morgan Stanley, Tocu Europe, Government of Singapore, Monetary Authority of Singapore, Government Pension Fund Global, Fidelity, Nomura, HSBC Global and more.
There were 737 doctors providing care to patients across the company's facilities, as of September 30, 2024. During this period, the company served 2.13 million patients and performed 220,523 surgeries. In the six months leading up to September 30, 2024, they served 1.15 million patients and conducted 140,787 surgeries.
Dr Agarwal's Health Care reported a net profit of Rs 39.56 crore with a revenue of Rs 837.94 crore for the six months ended on September 30, 2024. Dr Agarwal's Health Care commands a total market capitalization of Rs 12,698.37 crore. Last heard, the company commanded a grey market premium of merely Rs 12 apiece, suggesting a only 3 per cent gains for investors.
The company has reserved 15,79,399 shares worth Rs 63.49 crore for the eligible employees of the company, while 11,29,574 shares have been reserved for the shareholders of Dr Agarwals Eye Hospital Ltd. Of the net offer, 50 per cent shares are reserved for qualified institutional bidders (QIBs), while non institutional and retail bidders will get 15 per cent and 35 per cent allocation, respectively.
Kotak Mahindra Capital Company, Morgan Stanley India Company, Jefferies India, Motilal Oswal Investment Advisors are the book running lead managers of Dr Agarwal's IPO, while Kfin Technologies is the registrar for the issue. Its shares shall be listed on both BSE and NSE likely on February 5, Wednesday. Here's what brokerage say about the IPO of Dr Agarwal's Health Care:
Anand Rathi Research
Rating: Subscribe for long-term
Dr Agarwal's Health Care is a leading eye care service chain in India. It addresses all ophthalmic needs with services. They have plans to expand their presence across India with new facilities, extending its reach and serving more patients along with continuing investing in strengthening its brand image, expanding its market presence, and increasing visibility, said Anand Rathi Research.
The issue is valued at 134 times its FY24 EPS. Following the issuance of equity shares, the company's market capitalization stands at Rs 12,698.37 crore , with a market cap-to-sales ratio of 9.5 times based on its FY24 earnings. The company has around 25 times of its market share in its business of eye care-related services," it added with a 'subscribe' for long-term' tag.
StoxBox
Rating: Avoid
The issue is overvalued compared to its listed peers. Driven by inconsistent financial performance, rich valuation and higher concentration of OFS in the Issue, we remain largely cautious of the listing, said StoxBox. "We thus recommend an 'avoid' rating for the issue and will reassess our rating in future following sustained business performance in upcoming quarters," it added.
Canara Bank Securities
Rating: Neutral
Dr Agrawal's dominance in the eye care market is rooted in its innovative and efficient operational model, favorable industry trends, and strategic growth initiatives. Emerging markets and acquisitions offer potential for further margin improvement, while their asset-light model supports sustainable financial growth, said Canara Bank Securities.
"The company's issue is available at a P/E ratio of 128 times for FY24 and 200 times for FY25E, indicating aggressive pricing compared to established multi-specialty hospitals in the industry. It is concentrated only in a single specialty of the eye care market. We are bullish on the company’s growth prospects but valuation remains a concern," it said with a 'neutral' rating for the issue.
SBI Securities
Rating: Subscribe for long-term
Dr Agarwal’s Health Care is valued at FY24/H1FY25 EV/Ebitda multiple of 33.9 times/27.7 times, respectively at upper end of price band. The company in its previous 2 years has reported 38 per cent, 41 per cent and 48 per cent CAGR in revenue, Ebitda and PAT to Rs 1,332 crore, Rs 362 crore and Rs 95 crore, respectively, said SBI Securities.
"While comparing the stock with its close peers, the issue appears to be fairly priced on valuation and financial parameters. We recommend investors to subscribe to the issue at cut-off price for long term investment horizon," it added.
Mehta Equities
Rating: Subscribe for long-term
Dr Agarwal’s comprehensive offerings, spanning advanced surgeries, consultations, non-surgical treatments and integrated pharmacies and optical counters, drive cross-selling opportunities. The valuation comes to a reasonable P/E of 79 times which seems the ask price is in line with similar listed industry peers, living limited upside in the short term, said Mehta Equities.
"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' to Dr Agarwal’s Health Care IPO for long term perspective only," it added.