 "Dr Agarwal's Health Care IPO opens today: GMP up 3%; Should you subscribe?")
Dr Agarwal's Health Care IPO: The initial public offering (IPO) of eye care services provider company, Dr Agarwal's Health Care, opens for public subscription today, January 29, 2025. The company has announced that it has already raised Rs 875.51 crore from anchor investors, with the bidding concluded on January 28, 2025.
As the public offering opens for subscription, here are the key details of Dr Agarwal's Health Care IPO, taken from its Red Herring Prospectus (RHP):
Dr Agarwal's Health Care IPO issue size
Dr Agarwal's Health Care IPO is a book-built issue of Rs 3,027.26 crore, comprising a fresh issue of 74,62,686 equity shares and an offer for sale, with promoters and others divesting up to 6,78,42,284 equity shares with a face value of Re 1 apiece.
Dr Agarwal's Health Care IPO price band, lot size
The company has set the price band at Rs 382-402 per share, with a lot size of 35 shares for the public offering. Accordingly, investors can bid for a minimum of 35 shares and in multiples thereof. To bid for one lot of 35 shares of Dr Agarwal's Health Care IPO, a retail investor would require a minimum of Rs 14,070, while Rs 1,93,154 would be required to bid for a maximum of 14 lots or 490 shares.
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Dr Agarwal's Health Care IPO grey market premium (GMP)
The unlisted shares of Dr Agarwal's Health Care commanded a decent premium in the grey market ahead of the IPO launch. Unlisted shares of Dr Agarwal's Health Care were trading at Rs 414 apiece, reflecting a grey market premium (GMP) of Rs 12, or 3 per cent, against the upper end of the IPO price of Rs 402, revealed sources tracking unofficial markets.
Dr Agarwal's Health Care IPO timeline
Dr Agarwal's Health Care IPO will remain available for subscription till Friday, January 31, 2025. Following this, the basis of allotment for Dr Agarwal's Health Care IPO shares is expected to be finalised tentatively on Monday, February 3, 2025, and the company’s shares will be credited to demat accounts on Friday, February 27, 2025.
Shares of Dr Agarwal's Health Care are expected to list on the BSE and NSE tentatively on Tuesday, February 4, 2025.
Dr Agarwal's Health Care IPO registrar, BRLM details
Kfin Technologies is the registrar of the public offering, while Kotak Mahindra Capital Company, Morgan Stanley India Company, Jefferies India, and Motilal Oswal Investment Advisors are the book-running lead managers.
Dr Agarwal's Health Care IPO objective
Dr Agarwal's Health Care will not receive any proceeds from the OFS. "Each of the Selling Shareholders shall be entitled to their respective portions of the proceeds of the Offer for Sale after deducting their proportion of Offer related expenses and relevant taxes thereon, as applicable," said the company in the RHP.
The company, however, plans to use the proceeds from the fresh issue to repay or prepay certain borrowings, and for general corporate purposes and potential inorganic acquisitions.
Should you subscribe to Dr Agarwal's Health Care IPO?
Canara Bank Securities - Neutral
Analysts at Canara Bank Securities have assigned a neutral rating on the public offering. The company's dominance in the eye care market, analysts said, is rooted in its innovative and efficient operational model, favorable industry trends, and strategic growth initiatives. "The increasing demand for eye care, driven by rising diabetes prevalence, an aging population, and more cataract cases, aligns with the company's expertise and operational scale. Emerging markets and acquisitions offer potential for further margin improvement, while their asset-light model supports sustainable financial growth," they added.
The company's issue, analysts said, is available at a P/E ratio of 128x for FY2024 and 200x for FY2025E, indicating aggressive pricing compared to established multi-specialty hospitals in the industry. "The company is concentrated only in a single specialty of the eye care market. We are bullish on the company’s growth prospects but valuation remains a concern. Hence, a ‘Neutral’ stance is recommended," analysts wrote in a research note.
Anand Rathi Research - Subscribe for long-term
Brokerage firm Anand Rathi Research, in its report, has recommended investors to subscribe to Dr Agarwal's Health Care IPO from a long-term perspective, citing that the issue is richly priced. According to the brokerage, at the upper band, the company is valued at 134x its FY24 EPS. Following the issuance of equity shares, the company's market capitalisation stands at Rs 12,698.37 crore, with a market cap-to-sales ratio of 9.5 based on its FY24 earnings.
"The company has around 25 per cent of its market share in its business of eye care-related services. They have plans to expand their presence across India by establishing new facilities, aiming to extend their geographic reach and serve more patients, along with continuing investing in strengthening their brand image, expanding their market presence, and increasing visibility," the brokerage added.
SBI Securities - Subscribe for long-term
Analysts at SBI Securities recommend investors to subscribe to Dr Agarwal's Health Care IPO from a long-term perspective. Dr Agarwal’s Health Care, analysts said, is valued at FY24/H1FY25 (annualised) EV/Ebitda multiple of 33.9x/27.7x respectively at the upper end of the price band on post-issue capital. "While comparing the stock with its close peers, the issue appears to be fairly priced on valuation and financial parameters. We recommend investors to subscribe to the issue at the cut-off price for a long-term investment horizon," wrote the analysts in a research note.
About Dr Agarwal's Health Care
Dr Agarwal's Health Care provides a comprehensive range of eye care services, including cataract surgery, refractive surgery, and other surgeries; consultations, diagnoses, and non-surgical treatments; and sells opticals, contact lenses and accessories, and eye care-related pharmaceutical products. The company's facilities are categorized as Primary Facilities (non-surgical eye care facilities), Secondary Facilities (surgical facilities), and Tertiary Facilities (super-specialty surgical facilities, including three centres of excellence). As of September 30, 2024, Dr Agarwal's Health Care network in India includes 28 'hubs' (tertiary facilities, including three COEs) and 165 spokes (comprising 53 primary facilities and 112 secondary facilities).