The Dr. Agarwal's Health Care IPO made its debut on the BSE and NSE on February 5, 2025, listing at an opening price of ₹446, marking a 10.94% premium from the issue price of ₹402 per equity share. The moderate debut reflects a mixed investor sentiment towards the IPO, with the company's strong market share in the eye care services industry but relatively high valuations.

About Dr. Agarwal's Health Care Limited

Dr. Agarwal's Health Care is one of the leading providers of eye care services in India, offering a comprehensive range of services including cataract surgeries, refractive surgeries, non-surgical treatments, and opticals such as contact lenses and eye care pharmaceuticals. The company holds a 25% market share in the Indian eye care service chain market as of FY 2024, making it a key player in the healthcare sector.

The company’s founder, Dr. Amar Agarwal, has over 35 years of clinical experience in ophthalmology, and the company is backed by institutional investors like Temasek Holdings and TPG. The company is known for its commitment to innovative technology and patient care, which has contributed to its significant market share and expansion plans.

IPO Details and Subscription

The Dr. Agarwal's Health Care IPO was a book-built issue, raising a substantial ₹3,027.26 Crores. The issue comprised of a fresh issue of 74.62 Lakh shares worth ₹300 Crores and an Offer for Sale (OFS) of 678.42 Lakh shares, totaling ₹2,727.25 Crores. The price band for the IPO was set between ₹382 to ₹402 per share, and the lot size was 35 shares. Retail investors were required to invest a minimum of ₹14,070, while HNIs had to invest ₹2,11,050 for 15 lots (525 shares).

The IPO saw a low subscription of only 0.45x on its final day of the subscription period. The grey market premium (GMP) for the IPO stood at ₹44, indicating an expected listing price of ₹446, a 10.94% premium over the issue price.

Grey Market Premium and IPO Review

The GMP of ₹44 for the Dr. Agarwal's Health Care IPO reflects moderate demand for the shares in the unorganized market. While the company has a strong brand in the eye care sector and a 25% market share, the IPO’s valuation appears high with a pre-issue P/E ratio of 128.43x and a post-issue P/E ratio of 152.88x, both of which are significantly above the industry average of 82x.

The company’s annualized EPS of ₹2.00 and PE ratio of 201x suggest that the IPO is fully priced, which could limit the potential for substantial listing gains.

Objectives of the IPO

The company plans to utilize the net proceeds from the IPO for the following purposes:

1. ₹1,950 Million for repayment or prepayment of borrowings.
2. General corporate purposes and potential inorganic acquisitions.

Key Financials

Dr. Agarwal's Health Care has seen consistent growth in its revenues and profits over the last few years. For the period ending September 30, 2024, the company posted revenues of ₹8,379.40 Million, with an EBITDA of ₹2,284.77 Million and a Profit after Tax (PAT) of ₹395.64 Million.

The P/E ratio of 128.43x (pre-issue) and 152.88x (post-issue) are notably high, indicating that the IPO might be overpriced relative to its financial performance. This is further emphasized by the company’s ROE of 9.33% and ROCE of 14.61% for FY24, which are below the industry average.

Conclusion and Recommendation

Given the high valuation and moderate listing gains indicated by the grey market premium, we recommend that investors avoid the Dr. Agarwal's Health Care IPO if they are seeking listing gains. The company’s strong market share and growth prospects in the eye care sector are positive factors, but the high valuation and limited upside in the short term suggest that long-term investors should be cautious.

The Upcoming IPOs in this week and coming weeks are Chamunda Electricals.

The Current active IPO are Malpani Pipes And Fittings and Dr. Agarwal's Health Care.

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