Dr. Agarwal’s Health Care Limited IPO: Check IPO Date, Lot Size, Price & Details

Business Overview:

Dr. Agarwal's Health Care Limited is a comprehensive eye care service provider with a network of 209 facilities as of September 30, 2024. The company provides a range of services including cataract, refractive, and other surgeries, as well as consultations, diagnoses, and non-surgical treatments. They also sell opticals, contact lenses, accessories, and eye care related pharmaceutical products.

Their network operates on a hub-and-spoke model, with 28 tertiary "hubs" (including three Centers of Excellence) and 165 primary and secondary "spokes" in India, helping with scalability and accessibility. They also operate 16 facilities across nine countries in Africa. The company is led by experienced doctors and management, with a strong focus on patient care and brand reputation.

The company has also made several acquisitions inorganically.

IPO Details:

Objects of the Issue:

• Repayment of certain borrowings (Rs. 195 Crs)
• Unidentified Inorganic Acquisitions for growth
• General Corporate Purposes

Strengths:

• Brand Recognition and Market Position: The company is the largest eye care service provider in India by revenue, with a well-established and trusted brand. This brand recognition helps attract patients and build trust in the company's services.
• Comprehensive Service Offering: It offers end-to-end, comprehensive eye care services, which include a wide range of treatments, surgeries, and related products.
• Scalable Hub-and-Spoke Model: The company uses an asset-light hub-and-spoke operating model, which enables scalability and efficient resource utilization.
• Intellectual Property: The company has taken steps to protect its brand and other intellectual property, with 47 registered trademarks in India, including its logos. 

Risks:

• Dependence on Medical Professionals: The company's reliance on doctors via retainership arrangements is a double-edged sword. The premature termination of these arrangements could significantly disrupt operations and impact the company's financial stability
• Pending Regulatory Approvals: The company has pending applications for pollution control, trade licenses, and operational approvals, across facilities in India, including bio-medical waste, air, water, and clinical registrations. Approx 24.43% of revenues are generated from such facilities (As of Mar-24).
• Borrowings and Guarantees: The company have significant borrowings and has also provided corporate guarantees for its subsidiaries' loans, creating a complex web of financial obligations.
• Geographic Concentration: A majority of the company's facilities are located in Tamil Nadu, Maharashtra and Karnataka, making it vulnerable to adverse developments in these regions.

Financial Highlights:

Conclusion:

There are no Indian listed peers in comparable size and scale as that of the company for purpose of peer comparison. However, they have mentioned few healthcare companies in the prospectus as their peers. Such as Narayana Hrudayalaya, Aster DM, and KIMS. The Price to earnings valuation of these companies are 33 times, 79 times, & 136 times respectively.

However, considering the size of the market, operations of the company - earnings valuation of 128x seems to be high.

Therefore, we recommend to avoid to this IPO.

However, post listing investors can closely track the results and management’s outlook before taking an investment decision.