Is Dr. Agarwal's Health Care IPO Good or Bad - Detailed Review
Last Updated: 27 January, 2025
9 min read
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Dr. Agarwal's Health Care IPO is kicking off its initial public offering which will be open from January 29, 2025, to January 31, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether Dr. Agarwal's Health Care IPO is good or bad, whether it is worth investing in this IPO, and so on.
This article offers a comprehensive Dr. Agarwal's Health Care IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice
Dr. Agarwal's Health Care IPO Review
Dr. Agarwal's Health Care is a prominent eye care provider, operating 209 facilities and serving 2.13 million patients in FY24. The company offers advanced surgical and non-surgical treatments and has also established an international presence with 16 centers across nine African countries.
The company's revenue grew significantly from Rs 696 crores in FY22 to Rs 1,332.15 crores in FY24, driven by an increase in surgeries and the addition of new facilities. Its EBITDA improved to Rs 406.55 crores, reflecting better margins, while PAT reached Rs 95.05 crores despite a slight decline in profitability. However, ROE and ROCE declined due to operational inefficiencies.
That said, the company faces certain risks, including the potential early termination of doctor retainership agreements and difficulties in attracting and retaining medical professionals. These challenges could impact its operations and cash flow.
Company Overview of Dr. Agarwal's Health Care IPO
Dr. Agarwal's Health Care offers a wide range of eye care services, including cataract and refractive surgeries, consultations, non-surgical treatments, and the sale of optical products, contact lenses, and eye care-related pharmaceuticals.
As of September 30, 2024, Dr. Agarwal's Health Care operated 209 facilities, delivering comprehensive eye care solutions and ensuring widespread accessibility. With a team of 737 doctors, the company served 2.13 million patients and performed 220,523 surgeries in FY2024. In the first half of FY2025 alone, it treated 1.15 million patients and conducted 140,787 surgeries.
The Services provided by the company are:-
Cataract Surgeries: Their facilities provide advanced surgical treatments, including small-incision cataract surgery, phacoemulsification, robotic cataract surgery, and glued intraocular lens procedures.
Refractive surgeries: Their refractive surgeries aim to correct vision errors, reducing the need for glasses or contact lenses. Key treatments include LASIK, SMILE, implantable collamer lenses, and photo-refractive keratectomy.
Other surgeries: They also provide various surgical treatments for eye ailments, including retinal surgeries, corneal transplants, pinhole pupilloplasty, oculoplasty, and procedures for glaucoma and pterygium.
Their international operations began in 2012 and have expanded to 16 facilities across nine African countries as of September 30, 2024. These centers offer a comprehensive range of eye care services, including treatments for cataracts, glaucoma, diabetic retinopathy, retinal detachment, and dry eye.
Industry Overview of Dr. Agarwal's Health Care IPO
According to the CRISIL MI&A Report, India's eye care market has grown at a strong CAGR of 11.5% from FY19 to FY24, reaching Rs.378 billion in FY24. This growth is driven by rising demand for surgical and non-surgical treatments for various eye disorders, reflecting the sector's expanding scope and significance.
Surgical treatments in the eye care industry include cataract, glaucoma, retina, refractive, cornea, and other eye-related surgeries, with cataract surgery holding the largest share in India.
Non-surgical treatments cover general checkups, pre-treatment assessments, diagnostics, and post-treatment follow-ups, highlighting the industry's comprehensive care offerings.
Financial Overview of Dr. Agarwal's Health Care IPO
Particulars | Six month period ended September 30, 2024 (Rs Cr) | FY 2024 (Rs Cr) | FY 2023 (Rs Cr) | FY 2022 (Rs Cr) |
|---|---|---|---|---|
Revenue from Operations | 820 | 1,332.15 | 1,017.98 | 696 |
EBITDA | 228.47 | 406.55 | 283.86 | 199.82 |
EBITDA Margin | 27.27% | 29.54% | 27.52% | 27.99% |
PAT | 39.56 | 95.05 | 103.23 | 43.16 |
PAT Margin | 4.72% | 6.91% | 10.01% | 6.05% |
ROE | 2.69% | 9.33% | 23.12% | 19.96% |
ROCE | 8.30% | 14.61% | 15.18% | 15.02% |
Dr. Agarwal’s Health Care has demonstrated strong financial growth over recent years. The revenue from operations increased from Rs.696 crores in FY 2022 to Rs.1,332.15 crores in FY 2024. This growth is primarily driven by a rise in surgeries performed at existing centers and the establishment of new facilities.
The EBITDA improved from Rs.199.82 crores in FY 2022 to Rs.406.55 crores in FY 2024. The EBITDA margin also rose from 27.99% to 29.54% during this period. This growth indicates that the company is not only earning more revenue but is also managing its costs effectively.
PAT increased from Rs.43.16 crores in FY 2022 to Rs.95.05 crores in FY 2024. The PAT margin decreased from 10.01% to 6.91% in FY 2024. This decline is primarily due to the recognition of deferred tax assets in FY 2023.
The Return on Equity (ROE) decreased from 19.96% in FY 2022 to 9.33% in FY 2024 due to an increase in equity. Similarly, the Return on Capital Employed (ROCE) remained stable at approximately 15% over the past three fiscal years, reflecting consistent operational performance.
Strengths and Risks of Dr. Agarwal's Health Care IPO
Let’s dive into the strengths and weaknesses to assess if Dr. Agarwal's Health Care IPO is good or bad for investors
Strengths:
They are the largest eye care service chain in India by revenue for FY24, generating approximately 1.7 times the revenue of the second-largest chain. With a market share of around 25% in the eye care service chain market and the highest number of facilities in the country as of September 30, 2024, they hold a dominant position in the industry.
Dr. Agarwal's Health Care is a leading end-to-end eye care services provider, offering a comprehensive range of solutions to address all ophthalmic needs of their patients.
Their network follows a “hub-and-spoke” model, enabling them to handle high patient volumes efficiently. This approach improves accessibility and offers patients more choices while optimizing the utilization of critical doctor resources across the network.
Risks:
They engage doctors through retainership agreements, but there is no guarantee that these arrangements will not be prematurely terminated. Difficulty in attracting and retaining doctors and medical professionals could negatively impact their business, financial condition, operations, and cash flows.
Their business heavily relies on strong brand equity and reputation. Any failure to maintain or enhance these, including potential negative publicity, could negatively impact their operations, financial performance, and future prospects.
They operate in a highly regulated industry, where non-compliance with safety, health, environmental, labor, or other regulations, or failure to obtain or renew necessary approvals, could negatively impact their business, reputation, financial health, and cash flows.
Strategies of Dr. Agarwal's Health Care IPO
They plan to expand their presence across India by establishing new facilities to widen their geographic footprint and enhance patient reach. Their growth strategy is backed by a proven, capital-efficient hub-and-spoke model.
Supported by an experienced team of doctors and paramedics, they aim to enhance brand recognition and reputation to attract more patients. They also plan to expand patient education and awareness programs, promoting knowledge about eye care treatment options.
They actively explore ways to reduce the cost of eye care services, making them more affordable while enhancing profitability. By centralizing the purchase of equipment, surgical consumables, and optical and pharmaceutical products, they ensure consistent procurement prices and focus on vendor consolidation to improve margins.
Dr. Agarwal's Health Care IPO Vs Peers
Let’s conduct a peer comparison to assess whether it’s worth investing in Dr. Agarwal's Health Care IPO
Company Name | Revenue from Operations (Rs. in Crores.) | EPS (in Rs.) | NAV per share (Rs.) | RONW (%) |
Dr. Agarwal's Health Care Limited | 1,332.15 | 3.14 | 50.53 | 6.21% |
Apollo Hospitals Enterprise Limited | 19,059.2 | 62.50 | 481.93 | 12.97% |
Max Healthcare Institute Limited | 6,849 | 10.89 | 86.54 | 12.58% |
Fortis Healthcare Limited | 6,892.9 | 7.93 | 101.48 | 7.82% |
Global Health Limited | 3,275.11 | 17.80 | 108.17 | 16.46% |
Narayana Hrudayalaya Limited | 5,018.24 | 38.86 | 141.98 | 27.37% |
Krishna Institute of Medical Sciences Limited | 2,498.14 | 7.75 | 228.47 | 16.96% |
Aster DM Healthcare Limited | 3,698.9 | 3.60 | 71.62 | 3.63% |
Rainbow Children's Medicare Limited | 1,296.9 | 21.38 | 124.03 | 17.24% |
Dr. Agarwal's Health Care Limited stands out as a smaller player in terms of revenue, with Rs.1,332.15 crore in FY24 compared to its larger peers like Apollo Hospitals with Rs.19,059.2 crore and Max Healthcare Rs.6,849 crore.
However, its Earnings Per Share (EPS) of Rs.3.14 and Net Asset Value (NAV) per share of Rs.50.53 indicate its early growth stage. Its Return on Net Worth (RONW) of 6.21% is lower than most peers, such as Narayana Hrudayalaya (27.37%) and Global Health (16.46%).
While Apollo Hospitals dominates the sector with high revenue and RONW of 12.97%, Dr. Agarwal's IPO is positioned as a growth story, catering to investors seeking exposure to the rapidly expanding eye care segment.
Objectives of Dr. Agarwal's Health Care IPO
Repayment/prepayment of certain borrowings (partial or full).
Funding general corporate purposes.
Unidentified inorganic acquisitions.
Dr. Agarwal's Health Care IPO Details
IPO Date
Dr. Agarwal's Health Care IPO is open to subscription from January 29, 2025, to January 31, 2025. The shares will be allocated to investors on February 3, 2025, and the company will be listed in the NSE and BSE on February 5, 2025.
IPO Issue Price
Dr. Agarwal's Health Care IPO is offering its shares in the price band of Rs. 382 to Rs. 402 per share. This means you would require an investment of Rs.14,070 per lot (35 shares) if you are bidding for the IPO at the upper price band.
IPO Size
Dr. Agarwal's Health Care IPO is offering a total of 7,53,04,970 shares, amounting to Rs.3,027.26 crores. This includes an offer for sale of 6,78,42,284 shares, totaling Rs. 2,727.26 crores, and a fresh issue of 74,62,686 shares, totaling Rs. 300 Crores.
IPO Allotment Status
The shares from Dr. Agarwal's Health Care IPO will be allotted to its investors on February 3, 2025.
IPO Application Link
Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.
Apply for Dr. Agarwal's Health Care IPO
Dr. Agarwal's Health Care IPO GMP
Investors often check Dr. Agarwal's Health Care IPO GMP for market sentiment and listing price hints. However, GMP doesn’t reflect financial strength, so a financial analysis is crucial before investing.
Important IPO Details | |
|---|---|
IPO Date | January 29, 2025 - January 31, 2025 |
Allotment Date | February 03, 2025 |
Listing Date | February 05, 2025 (NSE & BSE) |
Issue Price | Rs.382 to Rs.402 per share |
Lot Size | 35 shares (investment of Rs.14,070 at upper price band) |
Conclusion
Dr. Agarwal's Health Care Limited operates in the eye care sector, offering a comprehensive range of treatments and holding a significant 25% market share. While its revenue has shown steady growth, it remains a smaller player compared to peers like Apollo Hospitals. Positioned as a growth story in the rapidly expanding eye care segment, investors are advised to conduct thorough research before making any investment decisions.
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