Dr. Agarwal’s Healthcare Limited IPO: Should You Invest? Key Insights & Analysis : A new IPO is launching soon, and its name is Dr. Agarwal’s Healthcare Limited. The issue size of this IPO is ₹3027 crore, and it will be open for subscription from January 29 to January 31. In this article, I’ll guide you through whether it’s a good investment choice, the company’s business model, and its financial health.
Company Overview:
Dr. Agarwal’s Healthcare offers comprehensive eye care services, including:
- Consultations
- Diagnostics
- Non-surgical treatments
- Eye surgeries (cataracts, refractive surgeries)
- Optical products (spectacles, contact lenses, accessories)
- Pharmaceutical items related to eye care.
Their revenue comes from:
- 64.2% from surgeries
- 13.06% from optical product sales
- 7.86% from pharmaceutical sales
- 6% from consultations.
The company operates over 180 branches in India and 15 branches abroad. As of September 30, 2024, they employ 737 doctors and have conducted 220,523 surgeries. They hold a 25% market share in eye care services, meaning 1 in 4 people seeking eye care choose their hospitals.
Financial Overview:
The company’s assets have grown significantly:
- 2022: ₹1000 crore
- 2023: ₹1026 crore
- 2024: ₹1825 crore
- September 2024: ₹3393 crore
Revenue has also been increasing:
- 2022: ₹713 crore
- 2023: ₹1000 crore
- 2024: ₹1300 crore
- For the current financial year, revenue until September 30, 2024, was ₹837 crore.
However, Profit After Tax (PAT) has fluctuated:
- 2022: ₹43 crore
- 2023: ₹100 crore
- 2024: ₹95 crore
- As of September 2024, it stood at ₹40 crore, showing a slight dip.
Key Financial Indicators:
- Return on Equity (ROE): 9.33% (fair but not exceptional)
- Return on Capital Employed (ROCE): 1461% (good, but not outstanding)
- Return on Net Worth: 621% (good)
- Price-to-Book Value: 7.96 (average)
IPO Details:
- Issue Size: ₹3027 crore
- Fresh Issue: ₹300 crore (to be used for development and repaying loans)
- Offer for Sale: ₹2727 crore (going to promoters and shareholders)
- Price Band: ₹382 – ₹402
- Minimum Lot Size: 35 shares
- Maximum Lot Size: 14 lots (₹196,980 investment)
The IPO opens on January 29 and closes on January 31, with allotments announced on February 4. If you don’t get allotment, a refund will be issued.
Gray Market Premium:
The current gray market premium is ₹15 per share (down from ₹32 the previous day). This indicates a lack of high demand, which is a concern for investors.
Positives:
- Strong brand recognition.
- 25% market share in eye care services.
- The eye care market is growing, and the company focuses heavily on technology, ensuring better patient outcomes.
Negatives:
- High valuation.
- Intense competition in the healthcare space.
- Regulatory risks due to ever-changing regulations.
Conclusion:
While Dr. Agarwal’s Healthcare is a strong company with a solid market share, it faces challenges such as high valuation and rising competition. The company’s profits, while growing, may not yield large returns. The financial indicators suggest that while the company is stable, it might not offer high growth in the near future.
If you’re considering investing, be cautious and avoid expecting significant returns. Make sure it aligns with your risk tolerance.
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