DR. Agarwal’s Health Care IPO — Should You Subscribe? Read Anand Rathi's Analysis

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Anand Rathi Report

Dr. Agarwal's Health Care Ltd. will launch its initial public offering on January 29 and the offer closes for subscription on Jan. 31. Chennai-based eye care provider has fixed the price band in the range of Rs 382-402 per share.

The Rs 3,027.26 crore Ipo comprises of the fresh issue worth Rs 300 crore, while the offer for sale is worth Rs 2,727.26 crore.

The minimum order lot for bidding is 35.

Objects of the Issue

1. Repayment/prepayment, in part or full of certain of borrowings.

2. General corporate purposes and unidentified inorganic acquisition.

Valuation & Outlook

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 capitalization stands at Rs 12,700 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. We believe that the issue is richly priced and recommend “Subscribe – Long Term” rating to the IPO.

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