Dr. Agarwal's Health Gets 'Overweight' From Morgan Stanley On Coverage Initiation

Dr. Agarwal's Health Care Ltd., which recently listed on the stock exchanges, was added to Morgan Stanley's coverage with an 'overweight' rating and a bullish target price.

Citing a Crisil report that says eyecare will be one of India's fastest-growing single-specialty segments, the brokerage said the company is already a market leader and backed by a doctor-promoter team and appears well positioned to outperform.

The brokerage placed a target price of Rs 502 on Dr. Agarwal's Health Care stock, implying an upside potential of 17% to the previous close.

Patient volume growth is a key revenue driver and thus, along with consistent clinical outcomes, the eyecare business also needs a well-calibrated organic and inorganic facility expansion strategy, analysts said in a note.

"Dr. Agarwal's follows a hub-and-spoke model. Over F22-24, it increased its facility count from 106 to 180, 61% of which were acquisitions," it said.

They forecast Dr. Agarwal's to achieve a 19.3% compounded annual growth in revenue over the next three years, driven by the addition of approximately 45 new facilities per year. Operating margins may remain stable, resulting in a 19% Ebitda growth during the same period.

Furthermore, Morgan Stanley anticipates the company to reduce its debt and lower minority profits, leading to a significant 44% net income growth.

Dr. Agarwal's Health Care share price advanced 1.4% to Rs 434.65 after market opened. The benchmark NSE Nifty 50 was up 0.08%.

The stock has risen 6.7% since its debut last month. The relative strength index was at 53.