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Ahead of the issue, the company has raised ₹875.50 crore from anchor investors. Foreign institutions who participated in the anchor included Government of Singapore, Monetary Authority of Singapore, Government Pension Fund global, Invesco India Midcap Fund, Fidelity, The Nomura Trust, among others.
Anand Rathi: Subscribe for long-term
The brokerage believes that the issue is richly priced and recommended ‘Subscribe – Long Term’ rating to the IPO.
In its note, Anand Rathi said that Dr Agarwal’s Health Care is the leading eye care service chain in India by operational revenue for the Financial Year 2024, generating approximately 1.7 times the revenue of the country’s second-largest eye care service provider during the same period. The company addresses all ophthalmic needs with services such as cataract and refractive surgeries, consultations, diagnostics, non-surgical treatments, and optical and pharmaceutical products.
They have plans to expand their presence across India by establishing new facilities, aiming to extend its geographic reach and serve more patient along with continue investing in strengthening its brand image, expanding its market presence, and increasing visibility.
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 ₹12,698 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.
Geojit: Subscribe for long-term
At the upper price band, the issue is available at a P/E of 133.6x (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, it has recommended ‘subscribe’ on a long-term basis.
The company has set a price band of ₹382 to ₹402 per equity share of face value ₹1 each for its maiden initial public offer. Investors can bid for a minimum of 35 shares and in multiples thereof.
The IPO is 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.
Meanwhile, the bidding for anchor investors will open later today, the company said in a statement.
Kotak Mahindra Capital Company Ltd, Morgan Stanley India Company Pvt Ltd, Jefferies India Private Ltd, Motilal Oswal Investment Advisors Ltd are the book running lead managers of the Dr Agarwals Healthcare IPO, while Kfin Technologies Ltd is the registrar for the issue.
The allotment for the Dr Agarwals Healthcare IPO is expected to be finalised on February 3, while the company will list on BSE, NSE with tentative listing date fixed as February 5, 2025.
