Dr Agarwal’s Healthcare IPO Open for Subscription
Dr Agarwal’s Healthcare, one of India’s leading eye care service providers, is set to launch its much-anticipated Initial Public Offering (IPO) on January 29, 2025, with a subscription period closing on January 31, 2025. The IPO has generated significant attention due to its scale, industry positioning, and backing from notable investors.
Dr Agarwal Healthcare IPO Details and Price Band
The IPO aims to raise a total of ₹3,027.26 crores, with the price band for equity shares set at ₹382 to ₹402 per share. This public issue consists of two components:
- Fresh Issue of shares worth ₹300 crores.
- Offer for Sale (OFS) of 6.78 crore shares valued at approximately ₹2,727 crore at the upper price band.
Promoters, alongside key investors such as Temasek Holdings and TPG (Texas Pacific Group), are among those participating in the OFS, which indicates a partial divestment of their stakes.
Allocation of Shares and Subscription Details
The shares have been reserved in the following manner:
- 50% for Qualified Institutional Buyers (QIBs).
- 15% for Non-Institutional Investors (NIIs).
- 35% for Retail Investors.
- An additional allocation is reserved for company employees, with 15.79 lakh shares earmarked for this purpose.
Anchor investors will have the opportunity to place bids on January 28, 2025, one day before the main subscription opens.
Use of Proceeds
The proceeds from the fresh issue, amounting to ₹195 crore, will primarily be used for:
- Debt repayment, reducing financial burdens and improving profitability.
- Funding potential inorganic acquisitions that could expand the company’s market presence further.
- General corporate purposes to support operational and strategic needs.
The strategic deployment of these funds underpins the company’s aim to solidify its leadership position and fuel its future growth plans.
Company Overview and Market Position
Dr Agarwal’s Healthcare, headquartered in Chennai, was founded in 1957, starting as a single eye care facility. Over six decades, it has grown into India’s largest eye care hospital chain. The company operates 193 centers across 117 cities in 18 states, with an additional 16 facilities in nine African countries as of September 2024.
The company specializes in a wide range of eye care services, including:
- Cataract surgeries.
- Laser correction and refractive surgeries.
- Vitreoretinal surgery, glaucoma treatment, and corneal transplants.
- Specialized services such as pediatric ophthalmology, ocular oncology, neuro-ophthalmology, and oculoplastic.
Its services extend beyond surgeries, as it also provides consultations, diagnosis, non-surgical treatments, and retail offerings of optical products, contact lenses, and eye care pharmaceuticals.
Dr Agarwal Healthcare Financial Performance
Despite challenges in the healthcare sector, Dr Agarwal’s Healthcare has demonstrated strong financial growth:
- Revenue from operations for FY24 reached ₹1,332.15 crores, a 31% increase from ₹1,018 crores in FY23.
- The profit after tax (PAT) stood at ₹95.05 crores in FY24, though it reflects an 8% decline due to higher taxes.
These numbers signify robust operating performance and a healthy topline growth trajectory. However, the company faces the challenge of maintaining profitability amidst rising tax costs.
Strategic Backers and Investors
The company is supported by prominent private equity players:
- TPG, which holds a 33.75% stake.
- Temasek Holdings, the Singapore sovereign wealth fund, with a 28.18% stake.
Both investors have been pivotal in driving the company’s expansion. For instance, in 2022, Dr Agarwal’s raised ₹1,050 crores in funding from TPG and Temasek, marking a significant milestone in India’s eyecare industry. Temasek had previously invested ₹270 crores in the company in 2019, underscoring the long-standing investor confidence in its growth potential.
Industry Outlook and Growth Prospects
India’s eye care services industry is projected to grow at a 12-14% CAGR over the next four years, expanding from an estimated ₹37,800 crores in FY24 to around ₹65,000 crores by FY28. This growth is fueled by increasing awareness of eye health, a growing elderly population, and the demand for advanced ophthalmic treatments.
Dr Agarwal’s is well-positioned to capture a significant share of this expanding market. With a 25% market share in the organized eye care space, its broad network, specialized services, and customer trust make it a frontrunner in the sector.
Post-IPO Plans
The company plans to utilize the IPO proceeds to:
- Further reduce debt, strengthening its financial stability.
- Pursue inorganic opportunities, such as acquisitions of smaller regional players or advanced technology providers.
- Expand its footprint domestically and internationally through new facilities in underserved regions.
Final Thoughts
Dr Agarwal’s Healthcare IPO represents an exciting opportunity for investors to participate in the rapidly growing eye care sector. With its established market leadership, strong backing from global investment giants, and clear financial and strategic goals, the company is well-prepared to usher in its next phase of growth.
For prospective investors, the IPO offers a chance to contribute to, and benefit from, the continued development of India’s healthcare services landscape.