Dr Agarwal’s Healthcare IPO Day 3 Highlights: Issue booked 1.55x led by QIB portion. Check GMP, review, more

The initial public offer of Dr Agarwal IPO has been subscribed 1.55x on the third day of subscription, as per BSE data.

The initial share sale received bid for 8,32,18,380 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 41% subscription while the quota for non-institutional investors got subscribed 40%. The qualified institutional buyers (QIBs) has been booked 4.64x. The employee portion was subscribed 27%, while the portion reserved for shareholders was booked 52%.

The initial public offer of Dr Agarwal IPO has been subscribed 1.55x on the third day of subscription, at 17:27 IST, as per BSE data.

The initial share sale received bid for 8,29,80,520 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 41% subscription while the quota for non-institutional investors got subscribed 39%. The qualified institutional buyers (QIBs) has been booked 4.64x. The employee portion was subscribed 27%, while the portion reserved for shareholders was booked 51%.

The floor price and the cap price are 382 times and 402 time the face value of the equity shares. The price/earnings ratio based on diluted EPS for FY 2024 for the company at the upper end of the price band is 128.43 times. The Dr Agarwal's Healthcare IPO lot size is 35 equity shares and in multiples of 35 equity shares thereafter.

Dr. Agarwal’s Health Care is the largest eye care service chain in India by revenue from operations for FY 2024, with approximately 1.7 times the revenue of the second-largest eye care service chain in the country.

The initial public offer of Dr Agarwal IPO has been subscribed 1.53x on the third day of subscription, at 15:45 IST, as per BSE data.

The initial share sale received bid for 8,19,65,730 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 38% subscription while the quota for non-institutional investors got subscribed 38%. The qualified institutional buyers (QIBs) has been booked 4.64x. The employee portion was subscribed 26%, while the portion reserved for shareholders was booked 45%.

As the company expands its network across India, it plans to continue to invest in enhancing its brand image, market presence and visibility. The company have recently revamped its eye care diagnosis reports to patient friendly formats, which are easier to understand. The company has a dedicated team of multi-linguistic call centre executives fluent in 14 regional and national languages, including English and Hindi, to provide ease of communication to senior citizens, which form the company’s core patient group

The company has a clinical board to ensure standardization of clinical protocols, products, and processes across its network. The clinical board is overseen by its international advisory team and internal specialty expert team, which provide strategic direction and oversight across its operations.

The initial public offer of Dr Agarwal IPO has been subscribed 1.38x on the third day of subscription, at 14:51 IST, as per BSE data.

The initial share sale received bid for 7,36,23,900 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 35% subscription while the quota for non-institutional investors got subscribed 30%. The qualified institutional buyers (QIBs) has been booked 4.19x. The employee portion was subscribed 24%, while the portion reserved for shareholders was booked 39%.

The majority of its facilities are located in Tamil Nadu, contributing significantly to its market presence.

Holds approximately 25% of the total eye care service chain market in India.

• Comprehensive Eye Care Services: This includes advanced cataract and refractive surgeries, consultations, and non-surgical treatments for eyerelated issues.
• Optical Sales: The company also sells optical products, contact lenses, accessories, and eye carerelated pharmaceutical products through its network of facilities.
• Clinical Innovations: Under the leadership of Dr. Amar Agarwal, the brand has pioneered multiple surgical techniques and published numerous scientific papers.

The initial public offer of Dr Agarwal IPO has been subscribed 1.07x on the third day of subscription, at 13:18 IST, as per BSE data.

The initial share sale received bid for 5,74,16,625 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 31% subscription while the quota for non-institutional investors got subscribed 21%. The qualified institutional buyers (QIBs) has been booked 3.20x. The employee portion was subscribed 22%, while the portion reserved for shareholders was booked 33%.

• Repayment or prepayment (partially or fully) of specific borrowings. 
• Funding for general corporate purposes.
• Provision for potential inorganic acquisitions, not yet identified.

With a market capitalization projected between ₹12,700 crore to ₹12,900 crore post-IPO, Dr Agarwal's Health Care Limited remains well-poised for future growth. Their strong financial performance, including a 31% increase in revenue to ₹1,332 crore in FY24 and improved EBITDA margin to 27.2%, demonstrates efficient operations and robust profitability.

We recommend to subscribe the IPO with a long-term perspective.

The initial public offer of Dr Agarwal IPO has been subscribed 85% on the third day of subscription, at 12:15 IST, as per BSE data.

The initial share sale received bid for 4,55,42,315 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 30% subscription while the quota for non-institutional investors got subscribed 18%. The qualified institutional buyers (QIBs) has been booked 2.44x. The employee portion was subscribed 22%, while the portion reserved for shareholders was booked 32%.

On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 713.78 cr. / Rs. 43.16 cr. (FY22), Rs. 1031.49 cr. / Rs. 103.23 cr. (FY23), and Rs. 1376.45 cr. / Rs. 95.05 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 39.56 cr. on a total income of Rs. 837.94 cr. It marked a setback for FY23 (despite higher other income), on account of deferred tax provisioning and finance cost and other one-time adjustments. 

According to reports, the total volume of cataract surgeries in India grew at a CAGR of 4-6% between FY19 to FY24 to reach 14-16 mn in FY24. Going forward, the volume of the cataract surgery in India is projected to grow at a similar 4-6% CAGR between FY24 and FY28 to reach the surgery volume of approximately 17-19 mn in FY28P.

The success of business depends significantly on ability to recruit and retain sufficient numbers of trained and skilled doctors and medical staff. The patients may choose any of the facilities based on the reputations of individual doctors. If company fails to retain such doctors, it can affect business and cash flow. As of FY24, the attrition rate is 10.3% (Percentage of doctors who ceased to work with company against total number of doctors).

The initial public offer of Dr Agarwal IPO has been subscribed 45% on the third day of subscription, at 11:03 IST, as per BSE data.

The initial share sale received bid for 2,41,29,105 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 28% subscription while the quota for non-institutional investors got subscribed 16%. The qualified institutional buyers (QIBs) has been booked 1.01x. The employee portion was subscribed 20%, while the portion reserved for shareholders was booked 30%.

The brand and reputation, particularly for ensuring successful patient outcomes, are critical to success and the growth of the business. Any reputational damage will directly affect the business, cash flow and financial conditions of the company.

A significant majority of its facilities are located in the states of Tamil Nadu (in particular, Chennai), Maharashtra and Karnataka. These three states put together comprised of ~62% of total facilities. Any adverse developments in relation to these Facilities could adversely affect business, financial condition, results of operations and cash flows.

Company’s Chairperson, Dr. Amar Agarwal, has pioneered multiple surgical innovations in ophthalmology and has published several papers in reputed scientific journals globally. Other promoters include Dr. Adil Agarwal, Dr. Anosh Agarwal, Dr. Ashvin Agarwal, Dr. Ashar Agarwal. Company’s management team members have industry and technical knowledge with an average of 16 years of experience in the industry.

The initial public offer of Dr Agarwal IPO has been subscribed 43% on the thir day of subscription, at 10:03 IST, as per BSE data.

The initial share sale received bid for 2,30,28,635 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 25% subscription while the quota for non-institutional investors got subscribed 13%. The qualified institutional buyers (QIBs) has been booked 1.01x. The employee portion was subscribed 18%, while the portion reserved for shareholders was booked 27%.

As of September 30, 2024, it has 193 facilities and has a presence in India across 117 metro and non-metro cities spanning 14 states and four union territories through 193 facilities.

At the upper price band of ₹402, Dr Agarwal’s is available at a P/E of 133.6x (FY24), which appears expensive compared to peers. However, considering the company's plans to expand its presence across India by establishing new facilities, strengthening its brand image, and its consistent revenue growth over the years, we recommend ‘subscribe’ on a long-term basis.

As per Crisil's report, Dr. Agarwal’s Health Care is India’s largest eye care service chain in revenue in the last fiscal year 2024, which is approximately 1.7x of the second largest eye care service chain in the country. Additionally, the company had a 25% market share in the segment in the same period. As of September 30, 2024, the company has 193 facilities in India spanning 14 states and 4 UTs, and 16 facilities spread across 9 countries of Africa.

Dr. Agarwal’s Health Care is an end-to-end eye care services provider offering a comprehensive set of services. The company provides a comprehensive range of eye care products and services, covering cataract surgeries, refractive treatments, and other services such as consultations, clinical investigations, and non-surgical treatments. In addition, standard operating procedures (SOPs) are vital growth drivers for the eye care service chain in India.

Dr Agarwal's IPO GMP today is +1.5. This indicates Dr Agarwal's Healthcare share price was trading at a premium of ₹1.5 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Dr Agarwal's Healthcare share price is indicated at ₹403.5 apiece, which is 0.37% higher than the IPO price of ₹402.

Today's IPO GMP is pointing lower and is predicted to decline further based on grey market activity over the last 8 sessions. According to experts on investorgain.com, the lowest GMP is ₹1.50, and the highest is ₹54.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Dr Agarwal’s Healthcare IPO Live: The initial public offering (IPO) of Dr Agarwal's Healthcare Ltd, an eye care service provider supported by Temasek Holdings and TPG, has entered its third and the last day of the bidding process. Dr Agarwal’s Healthcare IPO has been subscribed 42% in the first two days of subscription period and investors have only one day left to apply for the IPO. 

The company’s centres operate on a “hub-and-spoke” model which supports high patient volumes and yields economies of scale and thus allowing greater accessibility and choice to patients. The company follows asset light model as out of total 193 facilities, as of Sep’24, 192 are on lease which enables it commit minimal upfront investments.

The initial public offer of Dr Agarwal IPO has been subscribed 42% on the second day of subscription, at 16:00 IST, as per BSE data.

The initial share sale received bid for 2,22,75,015 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 23% subscription while the quota for non-institutional investors got subscribed 11%. The qualified institutional buyers (QIBs) has been booked 1.01x. The employee portion was subscribed 16%, while the portion reserved for shareholders was booked 24%.

• Largest eye care services provider in India with a trusted brand
• End-to-end, comprehensive eyecare services offering
• Scalable, asset-light, hub-and-spoke operating model
• Proven clinical excellence driven by a strong clinical board and history of surgical innovations
• Continued organic expansion of the network in India

• To continue organic expansion of networks in India
• Strengthen brand equity with community, patients, and doctors across India
•  Undertake opportunistic acquisitions and restructuring to scale operations, leveraging on experience of inorganic growth and integration
• Focus on improving profitability and Facility-level growth and enhancing operational efficiencies
• Attracting and retaining qualified doctors

The initial public offer of Dr Agarwal IPO has been subscribed 39% on the second day of subscription, at 14:45 IST, as per BSE data.

The initial share sale received bid for 2,08,90,765 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 21% subscription while the quota for non-institutional investors got subscribed 10%. The qualified institutional buyers (QIBs) has been booked 95%. The employee portion was subscribed 16%, while the portion reserved for shareholders was booked 23%.

The company in its previous 2 years has reported 38%/41%/48% CAGR in Revenue/EBITDA/PAT to ₹1,332 cr/ ₹362 cr/ ₹95 cr respectively. 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 CUT-OFF price for long term investment horizon.

The company’s cost-efficient model utilizes only beds without in-patient services, eliminating the need to own or lease hospital premises. With a 67-year legacy, it operates a hub-and-spoke system to optimize outreach and efficiency.

The initial public offer of Dr Agarwal IPO has been subscribed 38% on the second day of subscription, at 13:27 IST, as per BSE data.

The initial share sale received bid for 2,04,08,115 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 20% subscription while the quota for non-institutional investors got subscribed 9%. The qualified institutional buyers (QIBs) has been booked 95%. The employee portion was subscribed 15%, while the portion reserved for shareholders was booked 22%.

In core markets such as Tamil Nadu, Andhra Pradesh, and Karnataka, facilities reach breakeven within 6-7 months, whereas non-core markets take 15 months. Non-core facilities generate ₹4.5 crore in revenue in the first year, scaling to ₹15 crore by the fifth year, with margins of 33-34%.

India’s cataract surgeries increased from 11 million in FY2019 to 14 million in FY2023 (4-6% CAGR) and are expected to reach 17-19 million by FY2028. Despite industry growth, the company’s share remains modest at 1%, performing 1,29,103 surgeries in FY2023.

Primarily operating in South and West India, the company derives 10% of its revenue from Africa but is strategically reducing its focus there to prioritize higher-growth markets in India. Emerging facilities provide opportunities for expansion and improved margins.

The initial public offer of Dr Agarwal IPO has been subscribed 11% on the second day of subscription, at 12:15 IST, as per BSE data.

The initial share sale received bid for 60,70,085 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 18% subscription while the quota for non-institutional investors got subscribed 8%. The qualified institutional buyers (QIBs) part is yet to be booked. The employee portion was subscribed 14%, while the portion reserved for shareholders was booked 20%.

The company holds a 13-15% market share in the Indian eye care service chain and claims a 25% share in terms of facilities and revenue. With significant room for expansion, particularly in emerging markets, it is well-positioned to capitalize on industry growth trends.

The company's issue 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. Company is concentrated only in single specialty of eye care market.

We are bullish on the company’s growth prospects but valuation remains a concern. Hence, a NEUTRAL stance is recommended.

The initial public offer of Dr Agarwal IPO has been subscribed 10% on the second day of subscription, at 11:06 IST, as per BSE data.

The initial share sale received bid for 54,90,310 shares against 5,35,26,172 shares on offer, according to BSE.

The portion for retail investors received 17% subscription while the quota for non-institutional investors got subscribed 8%. The qualified institutional buyers (QIBs) part is yet to be booked. The employee portion was subscribed 13%, while the portion reserved for shareholders was booked 19%.

In FY24, the company reported Revenue from Operations ₹1,332.15 crores (FY23: ₹1,017.98 crores) with Profit After Tax of ₹95.05 crores (FY23: ₹103.23 crores).

• Largest eye care services provider in India
• Offers end-to-end comprehensive eye care services
• Company follows scalable, asset-light, hub-and-spoke operating model
• Proven clinical excellence driven by a strong clinical board

The company generated 9.33% of the capital of the shareholders (ROE) in the last fiscal. With this, the company has generated a 14.61% return on capital deployed. The pre-IPO PE ratio is 130.44, based on FY24 earnings, which is higher than its peers.

Although the valuations are elevated, investors may still choose to “Subscribe” to the IPO, recognizing its potential for sustained growth over the long term. 

• Operates in high regulated industry.
• Retention of qualified and experienced doctors.
• Majority of total issue is OFS i.e 90.09%.

 “We believe India’s eye care market is expected to grow at a CAGR of ~11.5%, reaching Rs.378 billion in FY2024, presenting significant opportunities for the company to deepen its footprint in underserved regions. We believe its organic growth strategy and focus on expanding the primary facility network position it well to capture this growing demand. Hence, looking at all attributes we recommend our investors to “SUBSCRIBE” the Dr. Agarwal’s Health Care Ltd IPO for long term perspective only,” the brokerage said. 

Dr Agarwal’s Healthcare IPO comprises a fresh equity share issuance of ₹300 crore, along with a sell-off of 6.78 crore shares amounting to ₹2,727.3 crore from current stakeholders.

In addition to the promoters, the stakeholders involved in the sell-off include Arvon Investments Pte and Claymore Investments Mauritius Pte, both associated with the private equity firm Temasek Holdings, and Hyperion Investments Pte, linked to the US private equity firm TPG.