Dr. Agarwal's Health Care is a leading name in the eye care industry, providing comprehensive services that include cataract surgeries, refractive procedures, non-surgical treatments, consultations, and the sale of optical products such as contact lenses, accessories, and eye care pharmaceuticals. As of FY 2024, the company holds an impressive 25% market share in India's eye care services sector.

Dr. Agarwal's Eye Hospital, which is at the core of the company’s operations, is equipped with state-of-the-art technology and is staffed by highly skilled professionals. The company’s founder, Dr. Amar Agarwal, has over 35 years of experience and is highly regarded in the field of ophthalmology. His leadership has been pivotal in expanding the company's footprint across the country.

IPO Details
The Dr. Agarwal's Health Care IPO is a Book Built Issue totaling ₹ 3,027.26 Crores, comprising:

• Fresh issue of 74.62 lakh shares worth ₹ 300.00 Crores.
• Offer for Sale of 678.42 lakh shares, amounting to ₹ 2,272.25 Crores.

The price band for the IPO is set between ₹ 382 and ₹ 402 per share. The IPO is set to open for subscription from January 29, 2025, and will close on January 31, 2025. The allotment date is scheduled for February 4, 2025, with the listing date expected on February 5, 2025 on both BSE and NSE.

Grey Market Premium (GMP)
As of January 24, 2025, the Grey Market Premium (GMP) for the IPO is ₹ 44, indicating a 10.94% potential gain at the listing. However, GMP is not a reliable indicator of long-term value and should be used with caution.

IPO Subscription Status
The subscription period starts on January 29, 2025, and real-time subscription status updates will be available throughout the IPO period.

Financial Performance and Metrics
Dr. Agarwal's Health Care has shown consistent growth in its financial performance. The company’s revenues from operations for the year ending September 30, 2024 stood at ₹ 8,379.40 million, a steady increase from ₹ 7,137.84 million in 2022. The EBITDA for the period was ₹ 2,284.77 million, and the Profit After Tax (PAT) was ₹ 395.64 million.

The company’s pre-issue EPS for FY24 is ₹ 3.13, with a post-issue EPS of ₹ 2.63. The P/E ratio is high at 128.43x pre-issue and 152.88x post-issue, compared to the industry P/E ratio of 82x. This suggests that the IPO is fully priced.

Dr. Agarwal's Health Care also has a ROCE of 14.61%, ROE of 9.33%, and a RoNW of 6.21% for FY24, demonstrating a healthy return on capital employed and equity.

Utilization of IPO Proceeds
The company plans to utilize the funds raised from the IPO for the following purposes:

1. ₹ 1,950 million for the repayment/prepayment of certain borrowings.
2. The remaining funds will be used for general corporate purposes and potential inorganic acquisitions.

Why Invest in the Dr. Agarwal's Health Care IPO?
While Dr. Agarwal's Health Care has strong market presence and a proven track record in eye care, the high valuation and expensive P/E ratio make it a less attractive investment in terms of listing gains. Given the GMP of ₹ 44 and the company’s robust financials, we believe the IPO is priced at the higher end of the spectrum and might not offer significant short-term gains.

Recommendation
Due to the high P/E ratio and expensive pricing, we recommend avoiding the Dr. Agarwal's Health Care IPO for listing gains, despite its strong brand and market share. The company’s future growth potential remains strong, but the current pricing may not provide the best opportunity for immediate returns.

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