Dr Agarwal's Healthcare IPO Opens for Subscription, Sees 6% Bids on Day 1
The IPO includes a significant OFS component of INR 2,727 Cr. On the second day of bidding, the retail portion saw a 9% subscription, while non-institutional investors subscribed to 4%. Qualified institutional buyers had not yet placed bids.
The INR 3,027 Cr initial public offering (IPO) of Dr Agarwal's Healthcare, a leading eyecare service provider, opened for subscription on Wednesday, receiving an overall subscription of 6% as of 2:40 PM on the first day of bidding. Investors can subscribe to the issue until January 31.
The IPO includes a significant offer for sale (OFS) component of INR 2,727 Cr. On the second day of bidding, the retail portion saw a 9% subscription, while non-institutional investors subscribed to 4%. Qualified institutional buyers had not yet placed bids.
Ahead of its listing, Dr Agarwal's Healthcare was trading at a Grey Market Premium (GMP) of INR 8 on Wednesday, reflecting a 2% premium over the upper end of the price band of INR 402 per share. The GMP had dropped from INR 12 earlier.
The IPO is available within a price range of INR 382- INR 402 per share. Investors can bid for a minimum of one lot, with each lot comprising 35 shares.
Despite the large OFS component and premium valuation, analysts have recommended subscribing for long-term investment. The company is valued at 134 times its FY24 earnings per share (EPS) at the upper price band, with an estimated post-IPO market capitalization of INR 12,698 Cr.
"The company holds around 25% of its market share in the eye care services industry. We believe the issue is richly priced and recommend a 'Subscribe – Long Term' rating for the IPO," said Anand Rathi in a note.
Dr Agarwal's Healthcare provides a wide range of eye care services, including cataract and refractive surgeries, diagnostics, non-surgical treatments, and the sale of optical products, contact lenses, and pharmaceuticals. The company accounted for 25% of India's total eye care services market in FY24, serving 2.13 million patients and performing over 220,000 surgeries.
The firm operates on a hub-and-spoke model, with 28 hubs and 165 spokes across India as of September 2024.
According to a CRISIL report, India’s eye care industry is expected to grow at a CAGR of 12%-14% between FY24 and FY28, offering significant expansion opportunities for the company.
