Dr. Agarwal’s Healthcare IPO Review: Should You Apply? Dr. Agarwal’s Healthcare IPO has garnered significant attention among investors. The IPO will open from January 29 to January 31, 2025, and investors are eagerly assessing its potential. Dr. Agarwal’s Healthcare is the parent company of Dr. Agarwal’s Eye Care, which is already a listed entity and has delivered good returns. This article dives into the details of the IPO, covering its strengths, weaknesses, and whether you should apply or not.
Dr. Agarwal’s Healthcare IPO Review
Table of Contents
Quick Info Table
| IPO Details | Information |
|---|---|
| IPO Dates | January 29 – January 31, 2025 |
| Issue Price | ₹3,382 – ₹3,402 per share |
| Face Value | ₹1 per share |
| Lot Size | 35 shares |
| Issue Size | ₹3,027 crore |
| Fresh Issue | ₹300 crore |
| Offer for Sale (OFS) | ₹2,727 crore |
| Listing Date | February 5, 2025 |
| Purpose of IPO | Debt repayment and corporate needs |
| GMP (Gray Market Premium) | ₹7 per share (as of now) |
What Does Dr. Agarwal’s Healthcare Do?
Dr. Agarwal’s Healthcare operates in the eye care sector, offering a full range of services related to eye health. The company specializes in treatments like:
- Cataract surgeries
- Glaucoma management
- Laser corrections
- Corneal transplants
Additionally, it earns 76% of its revenue from surgeries and treatments, while the remaining 24% comes from the sale of optical products, including spectacles, lenses, and medicines.
The company has a strong presence in 117 cities across 14 states and 4 union territories in India, operating 193 facilities. Its robust market share of 25% in India’s eye care industry positions it as a leading player.
Financial Highlights
A closer look at the financials reveals the growth trajectory of the company. Here are the key numbers from 2022 to 2024:
- Assets:
- 2022: ₹1,000 crore
- 2024: ₹3,300 crore (3x growth in two years)
- Revenue:
- 2022: ₹713 crore
- 2024: ₹1,176 crore
- Growth: Nearly doubled
- Profit After Tax (PAT):
- 2022: ₹14 crore
- 2023: ₹3 crore (drop due to higher expenses)
- 2024: ₹95 crore (strong recovery)
- Profit Margins:
- 2023: 10%
- 2024: 6.9% (slight dip in profitability)
The company also holds ₹373 crore in debt, but plans to repay ₹95 crore from IPO proceeds, which improves its financial health.
Strengths of the IPO
- Established Brand:
Dr. Agarwal’s Eye Care is already a trusted name with a strong reputation in the healthcare sector. - Dominant Market Position:
With a 25% market share in eye care, it leads the industry in surgeries and optical product sales. - Geographical Reach:
The company operates in 193 locations, making it accessible to a large customer base. - Growth Potential:
The eye care market in India is expected to expand due to an aging population and increasing demand for advanced treatments. - Debt Reduction:
A portion of IPO funds will be used to reduce debt, improving financial stability.
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Concerns About the IPO
- Expensive Valuation:
The IPO’s Price-to-Earnings (P/E) ratio is 128, which is significantly higher than its peers. Other companies in the healthcare sector have P/E ratios ranging between 14 and 113, making this IPO overpriced. - High OFS Component:
A major portion of the IPO (₹2,727 crore) is an Offer for Sale (OFS), which means existing shareholders are cashing out rather than reinvesting in the company. This raises concerns about the promoters’ long-term commitment. - Profit Margins:
Although the company is profitable, its margins have declined in recent years, reflecting higher operating costs. - Low GMP:
The current Gray Market Premium (GMP) is just ₹7, indicating low demand in the unlisted market.
Should You Apply for Listing Gains?
Applying for IPOs solely for listing gains requires analyzing key parameters:
- GMP:
The GMP of ₹7 is below the ideal threshold of ₹20, suggesting limited upside potential. - Valuations:
The high valuation makes this IPO unattractive for short-term gains. - Anchor Investors:
While the anchor list may bring some optimism, it is unlikely to offset the concerns about pricing and profit margins. - Subscription Levels:
Strong demand during subscription could drive listing gains, but that is not guaranteed.
Verdict: The risks outweigh the rewards for listing gains. Investors should be cautious.
Should You Invest for the Long Term?
For long-term investors, the IPO offers a mixed bag:
Positives
- Strong Market Position: As a leader in eye care, Dr. Agarwal’s Healthcare is poised for growth.
- Growth in Revenue and Assets: The company has demonstrated consistent expansion.
- Healthcare Sector Resilience: The eye care market is relatively stable and less affected by economic fluctuations.
Negatives
- Expensive Valuation: The high P/E ratio suggests limited room for future appreciation.
- Promoter Dilution: A reduction in promoter holding is a red flag for long-term investors.
- Small-Cap Nature: Being a small-cap company, it carries higher risks compared to large-cap peers.
Verdict: Long-term investors with a high-risk appetite may consider the IPO, but others should wait for better opportunities.
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Final Thoughts
Dr. Agarwal’s Healthcare IPO has both strengths and weaknesses. While its leadership in eye care and revenue growth are impressive, its high valuation and declining margins raise concerns.
If you are looking for listing gains, this IPO might not meet expectations due to low GMP and expensive pricing. For long-term investments, consider the risks involved and assess your financial goals before applying.
Ultimately, the decision to invest should be based on thorough research and an understanding of your risk tolerance. Let us know in the comments if you plan to apply for this IPO and why!
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