Dr Agarwal's Healthcare Files for IPO, Plans to Raise ₹300 Crore

30 Sep 2024 , 11:39 AM

Dr Agarwal’s Healthcare, backed by Temasek Holdings and TPG, is set to raise funds through an initial public offering (IPO) after filing its draft papers with SEBI on September 27. The IPO will consist of a fresh issue of equity shares worth ₹300 crore and an offer-for-sale (OFS) of 6.95 crore shares by promoters and existing investors.

Prominent shareholders participating in the OFS include Amar Agarwal, Athiya Agarwal, Adil Agarwal, Anosh Agarwal, Ashvin Agarwal, Dr Agarwal’s Eye Institute, Farah Agarwal, and Urmila Agarwal. Additionally, institutional investors such as Arvon Investments Pte, Claymore Investments (Mauritius) Pte—both owned by Singapore’s Temasek Holdings—and Hyperion Investments Pte, owned by TPG, will also be selling shares.

Currently, the promoters hold 37.83% of the company’s shares, while public shareholders, including Arvon Investments (12.45%), Claymore Investments (15.73%), and Hyperion Investments (33.75%), own the remaining 62.17%.

Based in Tamil Nadu, Dr Agarwal’s Healthcare operates 165 eye care facilities in India and 15 globally, including nine in Africa. The company provides services such as cataract, refractive surgeries, and sells opticals, contact lenses, accessories, and eye care-related pharmaceutical products. In fiscal 2024, it held a 25% market share in India’s eye care service chain sector.

The Indian eye care industry is projected to grow at a CAGR of 12-14% from FY24 to FY28, with the industry size expected to increase from ₹37,800 crore in 2024 to ₹55,000-65,000 crore by 2028.

Dr Agarwal’s Healthcare, which owns a 71.90% stake in its listed subsidiary, Dr Agarwals Eye Hospital, plans to use ₹195 crore of the fresh issue proceeds to repay debt, with the remaining funds allocated for general corporate purposes and future acquisitions. As of July 2024, the company had a consolidated debt of ₹384 crore, which is expected to decrease significantly post-IPO. The company has improved its debt-to-equity ratio over recent years, reducing it to 0.70x in FY24 from 1.3x in FY23 and 2.71x in FY22.

On the financial front, despite strong revenue and operational performance, Dr Agarwal’s Healthcare saw a 7.9% drop in net profit in FY24, totaling ₹95 crore compared to ₹103.2 crore in the previous year. This decline was attributed to higher tax expenses, which amounted to ₹45.52 crore, compared to a tax write-back of ₹19.6 crore in FY23.

Revenue from operations surged by 30.9% to ₹1,332 crore in FY24, up from ₹1,018 crore in FY23. EBITDA also rose by 34% year-on-year to ₹362.3 crore, with margins expanding slightly to 27.2%.

Kotak Mahindra Capital Company, Morgan Stanley India, Jefferies India, and Motilal Oswal Investment Advisors have been appointed as merchant bankers for the IPO.