Avendus Spark has initiated coverage on Dr. Agarwals Health Care Ltd. with a buy rating, setting a target price of Rs 495. At the current market price of Rs 427, this implies a potential upside of 16%.
The brokerage expects the company to benefit from strong demand and ongoing consolidation in the eye care market, supported by a scalable operating model and a strong brand franchise across key regions.
Network expansion remains central to its growth strategy, with new centres expected to drive volumes and revenue. Its hub-and-spoke model is expected to improve efficiences. Avendus forecasts healthy growth in matures clusters, estimating a 12% CAGR over FY26–28E, driven by higher patient volumes and continued premiumisation of services and procedures.
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Dr. Agarwals Health Care's unit economics, combined with a disciplined acquisition strategy, are expected to support steady RoCE improvement over the medium term. While new unit additions will create an initial cost burden, operational efficiencies in mature centres should provide balance.
Avendus Spark expects Ebidta margin to remain broadly stable at 21% in FY28. Improvement in mature units is likely to be partly offset by EBITDA drag from newly added units, keeping overall profitability stable despite aggressive expansion. The brokerage believes Dr. Agarwal's Health Care offers long-term growth opportunity within a consolidating healthcare segment.
Shares of Dr. Agarwal's Health Care Ltd. closed at Rs 423.50 on Friday with the stock going as high as 2.75% intraday.
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