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Ahead of listing, shares of Dr. Agarwal’s Health Care were commanding no grey market premium (GMP) following the muted subscription and weak market sentiments. The muted trends from the unofficial market suggested towards a dull listing for the investors tomorrow.
According to Prashanth Tapse of Mehta Equities, Dr. Agarwal’s offer received low demand due to weak market sentiment, which is currently unfavorable for investors. Tapse believes the company presents a long-term investment opportunity in India’s largest eye care service chain by revenue in FY24, holding a dominant 25% market share in the organised segment.
Considering the market trend and volatility, Tapse expects a flat to negative listing at the issue price. Post-listing, he anticipates short-term volatility and advises non-allotted investors to adopt a wait-and-watch approach. Meanwhile, long-term investors who were allotted shares can continue to hold them from a long-term perspective.Sagar Shetty of StoxBox expects Dr. Agarwal’s Health Care to have a subdued market debut due to multiple concerns. The muted premium on its issue primarily reflects weak market sentiment, along with concerns about its high valuation, lower profitability, and the significant promoter exit via the offer for sale (OFS).
Given these factors, along with a lower subscription rate of 1.5 times, Shetty advises participants to avoid the issue. “We will reassess our rating based on the company’s sustained business performance in the upcoming quarters,” he said.
The IPO got subscribed 1.55 times during the three-day bidding process. The qualified institutional buyers (QIBs) part got subscribed 4.64 times, while the retail individual investors (RIIs) portion received 41% subscriptions. Non-institutional investors attracted 39% of subscriptions.The company sold its shares in a fixed price band of ₹382 to ₹402 per equity share of face value ₹1 each for its maiden initial public offer.
The IPO included a mix of fresh issue of equity shares worth ₹300 crore by the company, and an offer-for-sale of 6.95 crore equity shares by promoters and investors.
Dr Agarwal’s Healthcare will utilise ₹195 crore out of the net fresh issue proceeds for repaying its debt, and the remaining funds for general corporate purposes and inorganic growth as per the draft papers.
Dr. Agarwal’s Health Care held a 71.9% stake in subsidiary Dr Agarwal’s Eye Hospital that was incorporated back in 1994. Dr. Agarwal’s Health Care is the parent of listed company Dr Agarwal’s Eye Hospital.
With 165 facilities in India and 15 globally (including 9 in Africa), the Tamil Nadu-based company provides eye care services including cataract, refractive, and other surgeries as well as sells opticals, contact lenses and accessories, and eye care-related pharmaceutical products. It had a market share of approximately 25% of the total eye care service chain market in India during the fiscal 2024.
As of September 30, 2024, there were 737 doctors providing care to patients across the company’s facilities. 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.
The Indian eye care industry is projected to grow at a CAGR of 12-14% from FY24 to FY28. The size of the Indian eye care services industry was approximately ₹37,800 crore in fiscal 2024 and is projected to grow to ₹55,000-65,000 crore by FY28, as per the draft papers of Dr Agarwal’s Healthcare.
