Dr. Agarwal's Health Care Ltd, backed by TPG and Temasek, is all set to launch its Initial Public Offering (IPO), presenting a book-built issue totaling Rs 3,027.26 crore. Dr. Aggarwal's Health Care IPO comprises a fresh issue of 0.75 crore shares worth Rs 300 crore and an offer for sale of 6.78 crore shares worth Rs 2727.26 crore.
The price range for these equity shares with a face value of Rs 1 each has been fixed between Rs 382 and Rs 402. The subscription for the IPO will commence on January 29, 2025, and close on January 31, 2025. Additionally, the allotments will be confirmed by February 3, 2025. The listing is scheduled for February 4, 2025, on both BSE and NSE.
What Does the Company Do?
Officially launched in 2010, the legacy of Dr. Agarwal's Health Care Ltd dates back to its establishment in 1957 by the visionary duo of Dr. Jaiveer Agarwal and Dr. Tahira Agarwal. Over time, Dr. Agarwal's Health Care has emerged as India's largest eye care service provider, with a market share of 25%.
The organization operates through its extensive network of 737 doctors, offering services in 193 facilities across 14 states and 4 union territories in India, and is further supported by 16 international facilities in nine African countries.
As of September 2024, this healthcare organization has successfully served an impressive 2.13 million patients and performed 220,523 surgeries, showcasing its high patient volume and competitive surgical capabilities.
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Business Model
Dr. Agarwal's Health Care Ltd. uses a well-structured and scalable business model called a hub-and-spoke model to facilitate comprehensive eye care services nationwide. The larger, central facilities are called hubs, which handle advanced diagnostics and surgeries.
Meanwhile, the smaller satellite clinics, also serving as initial touchpoints, offer basic eye care, consultation, and primary diagnosis.
As of September 30, 2024, the organization operates 28 tertiary hubs and 165 primary and secondary spoke facilities, enabling efficient scaling and resource allocation.
Revenue Streams
While basic diagnosis, consultations, and other primary services account for 14.3% of Dr. Agarwal's Healthcare revenue, optical, contact lens, accessories, and pharmaceutical products account for 20.6%, and surgeries account for 65.1% of its revenue.
Surgeries are the most significant revenue stream for Dr. Agarwal's Health Care Ltd. A substantial part of the surgeries performed through its large network of hospitals and clinics is revenue from high-volume cataract surgeries, which account for 75.6% of the overall surgeries.
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Financial Performance
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Key Competitors
India's eye care industry is highly competitive and saturated, comprising multi-specialty hospital chains, specialized eye care clinics, regional hospitals, and smaller clinics. Based on Dr. Agarwal's Health Care Ltd RHP, some of the publicly listed competitors are Apollo Hospital Enterprises (P/E of 107.11), Max Healthcare Institute (P/E of 95.88), Fortis Healthcare (P/E of 82.11), Global Health (P/E of 57.49), Narayana Hrudayalaya (P/E of 33.14), Krishna Institute of Medical Sciences (P/E of 79.79), Aster DM Healthcare (P/E of 136.07) and Rainbow Children's Medicare (P/E of 67.90).
In the specialized eye care segment, Dr. Agarwal's Health Care also faces competition from major chains like ASG Hospitals, Vasan Eye Care, Sankara Nethralaya, Aravind Eye Care System, Lotus Eye Care Hospital, MaxiVision Eye Hospitals, Centre for Sight, and Eye Mantra.
Strength
- India's largest eye care service provider with a market share of 25%
- An efficient and proven hub-and-spoke model that comprises over 193 facilities, a team of 737 doctors, and 1,756 paramedical staff.
- Diversified presence with 33% in Tier I, 60% in other cities, and 7% in international markets
- Showcased consistent growth in terms of revenue and has managed stable and healthy EBITA
- The leadership team comprises experienced doctor-promoters supported by qualified medical staff and a seasoned managerial team.
Weaknesses
- Reliance on retainership agreements with qualified and experienced doctors
- Risk of negative publicity, adverse medical outcomes, and failure to maintain high standards of patient care
- A significant portion of an IPO's issue size is through an Offer for Sale (OFS) from existing shareholders, which opens a door to their exit, and a comparatively smaller amount of capital will go to the company.
- Highly competitive market and faces increased competition from other reputed healthcare service providers like Apollo Hospitals Enterprise Ltd and Max Healthcare Institute Ltd
- A significant concentration in the southern part of India, including Tamil Nadu, Maharashtra, and Karnataka, exposes it to regional economic downturns and the impact of any regulatory changes.
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