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The Indian healthcare industry is undergoing a significant transformation, with increasing investments, technological advancements, and rising demand for quality healthcare services. One of the key players in the eye care sector, Dr Agarwal Health care Limited, is launching its Initial Public Offering (IPO), offering investors an opportunity to join this growing industry.
But should you subscribe to Dr Agarwal Health Care IPO?
Let’s dive deep into the company’s background, sector outlook, financial performance, competitor analysis, objectives of the issue, risks, and final verdict to help you make an informed decision.
Dr Agarwal Health Care IPO is open for subscription from (29th Jan 2025) today onwards!
Dr Agarwal Health Care IPO Details:
- IPO Open Date 29th January 2025, Wednesday
- IPO Close Date 31st January 2025, Friday
- Price Band ₹382 to ₹402 per share
- Lot Size 35 shares
- Face Value ₹1 per share
- Issue Size at upper price band ₹3027 crore (Fresh Issue ₹300 crore and Offer for Sale ₹2727 crore)
- Listing exchanges NSE, BSE
- Cut-off time for UPI mandate confirmation by 5 PM on December 31, 2025
The tentative timeline for the IPO is as follows:
- Basis of Allotment 3rd February 2025, Monday
- Initiation of Refunds (if not allotted) 4th February 2025, Tuesday
- Credit of Shares to Demat (if gets allotments of shares) 04th February 2025 Tuesday
- Listing Date 05th February 2025, Wednesday
About the Company
Dr Agarwal Health Care Limited was incorporated in 2010 and provides a comprehensive range of eye care services, including cataract, refractive & other surgeries, consultations, diagnosis & non-surgical treatments globally. They also sell optical, contact lenses, accessories and eye care-related pharmaceutical products. They operate through a network of 209 facilities across 14 states and 4 union territories, with 117 cities in India and 9 countries in Africa.
As of September 30, 2024, the company had served 21.3 lakh customers through 737 doctors and performed 2,20,523 surgeries. As of H1 FY25, its doctors held 2 patents for their innovations. The company has a market share of ~25% in the eye care service chain industry. The net proceeds would be used to repay debt.
The company commenced international operations in 2012 in Africa, where it provides a range of eye care services, including treatments for glaucoma, cataracts, diabetic retinopathy, retinal detachment, and Dr Eye. It also offers refractive surgeries, pediatric and neuro-ophthalmological treatments, embedded pharmacies, and optical product counters.
As of September 30, 2024, they had a total network of 209 facilities operating on a hub-and-spoke model. The Indian network of 193 facilities includes 28 hubs (tertiary facilities, including 3 centres of excellence) and 165 spokes (comprising 53 primary facilities and 112 secondary facilities). The centres of excellence are located in Chennai (Tamil Nadu), Tirunelveli (Tamil Nadu), and Cuttack (Odisha). Further, they had 16 facilities across 9 countries in Africa.
To standardize the services, they constituted clinical committees, including a quality control committee, an education committee, a Drug and medical devices committee, and a research and development committee.
Sector Outlook in India
The Indian healthcare market is estimated to be around ₹9,50,000- ₹10,50,000 cr in FY24. This constitutes ~56% of hospitals, ~26% of domestic pharmaceuticals, and ~9% each of diagnostic centres and medical devices. The Indian healthcare delivery market is expected to grow by 9%- 11% from ₹6,30,000 cr in FY24 to ₹9,10,000-₹9,30,000 cr in FY28.
The eye care market in India grew at a CAGR of 11.5% between FY19 and FY24 to reach ₹37,800 cr in FY24. It is projected to grow at a CAGR of 12%-14% from FY24 to FY28 and reach a market size of ₹55,000-₹65,000 cr. It formed ~6% of the overall healthcare delivery market in FY24. The growth in the industry shall be led by the high prevalence of eye-related disorders in India, rise in income levels, shifting age demographics, lifestyle changes, emerging eye care service chains, and government and non-government organization initiatives to promote awareness about eye health in India. According to IAPB (International Agency for the Prevention of Blindness), India has the highest number of visually impaired people in the world, with nearly 1 out of every 5 individuals in India facing vision loss disorder.
The value of the Indian optical industry increased from ₹20,500 cr in FY19 to ₹35,600 cr in FY24, growing at a CAGR of 11.7%. The Indian eye pharma market witnessed a CAGR of 7%- 9% between FY19 and FY24, reaching a value of ~₹3,300-₹3,800 cr in FY24.
Financial Performance
Dr Agarwal Healthcare has shown strong financial performance. Revenue grew at a CAGR of approximately 38% from FY22 to FY24, reaching ₹1,332 crore in FY24. EBITDA margins have remained stable at around 27%, reflecting operational efficiency. However, net profit dipped slightly in FY24 due to expansion costs and increased financing expenses.
In the competitive landscape, Dr Agarwal competes with players such as ASG Hospitals, Centre for Sight, and MaxiVision Eye Hospitals, all of which offer specialized eye care services. Despite this competition, Dr Agarwal maintains a significant advantage due to its well-established brand, extensive network presence, and strategic expansion plans.
Objectives of the Issue
Dr Agarwal Health Care IPO aims to raise ₹3,027 crore, which includes a fresh issue of ₹300 crore and an offer for sale (OFS) of ₹2,727 crore. The proceeds will be used for:
- Repayment of debt (₹195 crore) to reduce financial leverage.
- General corporate purposes, including inorganic acquisitions for expansion
Risk Factors
Like any investment, Dr Agarwal Health Care IPO comes with its own set of risks.
- High Dependence on Skilled Workforce: The company operates in a highly specialized industry that requires skilled ophthalmologists and medical staff. The attrition rate of 12.52% in FY24 is concerning.
- Regulatory and Compliance Risks: The healthcare industry is heavily regulated, requiring approvals for medical equipment, drug storage, and facility operations. Compliance failures can impact growth.
- Payment Delays from Insurance & Government Schemes: A significant portion of revenue comes from government insurance schemes and third-party payers, which can lead to payment delays.
- High Valuation: The IPO has a P/E ratio of 133.6x (at the upper price band of ₹402), which seems expensive compared to other listed healthcare firms.
Investors should carefully evaluate these risks before subscribing to the Dr Agarwal Health Care IPO.
Should you subscribe to Dr Agarwal Health Care IPO?
Dr Agarwal Health Care Limited has ~ a 25% market share in the eye care service market in India and also operates in Africa. The company operates in a highly competitive industry and appears to be richly valued. However, its vast network and inorganic expansion plans pave the way for future growth.
The company will expand in India by establishing new facilities to increase its geographic presence and patient reach. It will scale operations in target micro-markets through an organic growth strategy. To boost footfall, select mature facilities with high patient volumes will be relocated to nearby areas. Efforts will focus on underserved communities in target regions lacking sufficient eye care services. The company is also exploring avenues to reduce the cost of eye care service delivery, making it affordable for patients and contributing to profitability growth.
Before you invest in Dr Agarwal Health Care IPO, make sure you understand the potential risks and rewards. In this blog post, we have provided a full review of both the benefits and possible drawbacks of participating in Dr Agarwal Health Care IPO. StockEdge’s panel of experts rated Dr Agarwal Health Care Limited’s IPO as Average. Furthermore, we’ve created a Dr Agarwal Health Care IPO Note that delves deep into the company’s financial situation and SWOT analysis, providing you with a more in-depth understanding of the company’s prospects.
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