Dr. Agarwal’s Eye Hospital Limited has taken a significant corporate decision that will reshape its future structure and strengthen its financial and operational capabilities. In its board meeting held on August 27, 2025, the company approved two major proposals – the merger of Dr. Agarwal’s Eye Hospital Limited with its holding company Dr. Agarwal’s Health Care Limited (AHCL), and a preferential allotment of equity shares to AHCL worth over ₹699 crore. These decisions are aimed at achieving long-term operational synergies, capital efficiencies, and value creation for shareholders.

This article provides an in-depth understanding of the merger, the preferential allotment, regulatory requirements, and how these changes are expected to impact shareholders, investors, and the healthcare sector.

Details of the Merger between Dr. Agarwal’s Eye Hospital and AHCL

The Scheme of Amalgamation has been proposed under Sections 230 to 232 of the Companies Act, 2013. Under this scheme, Dr. Agarwal’s Eye Hospital will be merged into AHCL by way of absorption. The merger is structured as a going concern, which means that the business, assets, liabilities, and operations of Dr. Agarwal’s Eye Hospital will continue seamlessly under AHCL without any disruption.

• Share Exchange Ratio:
  For every 2 equity shares of ₹10 each in Dr. Agarwal’s Eye Hospital, shareholders will receive 23 equity shares of ₹1 each in AHCL.
  This ratio has been finalized based on a joint valuation report by PwC Business Consulting Services LLP and Bansi S Mehta Valuers LLP.

• Fairness Opinion:
  To ensure transparency, Motilal Oswal Investment Advisors Limited, a SEBI-registered Category-I Merchant Banker, has provided a fairness opinion confirming that the exchange ratio is fair.

• Impact on Shareholding Pattern:
  After the merger, the public shareholding in AHCL will increase from 67.58% to 69.06%, while promoter shareholding will reduce slightly from 32.42% to 30.94%.

This restructuring will dissolve Dr. Agarwal’s Eye Hospital as a separate legal entity, consolidating its entire operations into AHCL.

Rationale Behind the Merger

The merger aims to achieve multiple benefits for both companies and their stakeholders. Some of the key advantages highlighted are:

1. Operational and Financial Efficiencies:

   • Consolidation of operations will help standardize protocols.

   • Achieve economies of scale by pooling resources and reducing duplication of costs.

   • Transparent management and streamlined decision-making.

2. Integrated Capital Allocation for Stronger Growth:

   • A single capital structure allows efficient allocation of funds and working capital management.

   • Better cash flow utilization and flexibility to fund expansion and innovation.

3. Simplified Governance Framework:

   • Eliminates multiple corporate entities.

   • Ensures dedicated management focus under one unified structure.

   • Reduces compliance, administrative, and legal costs.

4. Shareholder Value Creation:

   • Expected earnings per share (EPS) accretion from the first year after merger.

   • Growth opportunities for both AHCL and erstwhile shareholders of Dr. Agarwal’s Eye Hospital.

   • Long-term value creation through operational synergies and brand consolidation.

Financial Position of the Companies

As of March 31, 2025, the financials reflect strong growth for both entities:

• Dr. Agarwal’s Eye Hospital Limited:

  • Turnover: ₹397.15 crore

  • Net Worth: ₹209.61 crore

• Dr. Agarwal’s Health Care Limited (Standalone):

  • Turnover: ₹1,043.89 crore

  • Net Worth: ₹1,933.64 crore

• Dr. Agarwal’s Health Care Limited (Consolidated):

  • Turnover: ₹1,711 crore

  • Net Worth: ₹1,866.59 crore (excluding non-controlling interest)

Clearly, the merger combines a fast-growing subsidiary with a much larger parent entity, creating a stronger consolidated entity with significant financial strength.

Preferential Allotment of Shares to AHCL

Apart from the merger, the board has also approved the issuance of 1,32,827 equity shares of ₹10 each to AHCL on a preferential basis.

• Issue Price: ₹5,270 per share.

• Total Value: Approximately ₹699 crore.

• Post Allotment Holding:

  • AHCL’s shareholding will increase from 71.90% to 72.67%.

  • Public shareholding will be diluted slightly.

The preferential issue strengthens AHCL’s stake in the company and provides additional capital for growth.

Regulatory and Shareholder Approvals Required

The merger and preferential allotment will only become effective after obtaining necessary approvals from:

• Securities and Exchange Board of India (SEBI)

• Stock Exchanges (BSE and NSE)

• Shareholders and Creditors of both companies

• National Company Law Tribunal (NCLT)

• Any other statutory authorities as applicable

Additionally, the matter will be placed before shareholders at the 31st Annual General Meeting scheduled on September 24, 2025, which will be conducted through video conferencing/other audio-visual means (VC/OAVM).

Impact on Investors and Shareholders

The merger and preferential issue are expected to create long-term value for both institutional and retail investors.

1. Stronger Financial Position:
   With combined resources, AHCL will have greater capacity for expansion, innovation, and scaling operations across India and globally.

2. Improved Liquidity and Public Shareholding:
   The increase in public shareholding improves liquidity in AHCL shares, benefiting retail investors.

3. Earnings Growth:
   As efficiencies kick in, the merged entity is expected to report improved profitability and earnings per share.

4. Corporate Simplification:
   A simplified structure improves governance, transparency, and reduces compliance costs, boosting investor confidence.

Strategic Importance of the Move

The merger is not only a structural consolidation but also a strategic alignment of the group’s future growth plans. AHCL had already disclosed in its IPO prospectus in January 2025 that it was considering a potential merger with Dr. Agarwal’s Eye Hospital within three years of listing. By acting within the same year, the group demonstrates proactiveness and commitment to its expansion strategy.

Conclusion

The approval of the merger between Dr. Agarwal’s Eye Hospital and AHCL marks a transformational step in India’s healthcare sector. By combining operations, the companies aim to unlock efficiencies, allocate capital more effectively, and create greater value for shareholders.

Coupled with the ₹699 crore preferential allotment, the move significantly strengthens the group’s financial base, paving the way for sustained growth, expansion, and innovation in the eye care sector.

For investors, regulators, and stakeholders, this merger is a strong signal of confidence, growth, and long-term value creation in the Indian healthcare industry.

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