Dr Agarwal's Healthcare, a leading player in India's eye care industry backed by Temasek Holdings and TPG, has taken a significant step towards its much-anticipated initial public offering (IPO). The company filed papers with the Securities and Exchange Board of India (SEBI) with the aim to fuel the company’s expansion plans while allowing key promoters and institutional investors to divest part of their stake.
IPO Details: Fresh Issue and Offer for Sale
The IPO is a mix of a fresh issue of equity shares worth ₹300 crores and an offer-for-sale (OFS) of 6.95 crore equity shares.
Out of the ₹300 crore raised from the fresh issue, ₹195 crores will be used to repay its debt, which stood at ₹384 crores as of July 2024. The remaining funds will be utilized for general corporate purposes and for unidentified inorganic acquisitions, signalling the company's intent to grow through mergers or acquisitions in the near future.
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The OFS will include shares from both promoters and institutional investors. Promoters such as Amar Agarwal, Athiya Agarwal, and other family members will be selling shares, along with institutional investors like Arvon Investments and Claymore Investments (owned by Temasek Holdings) and Hyperion Investments (backed by TPG).
A Growing Footprint in Eye Care
Dr Agarwal’s Healthcare is well-positioned to capitalize on India's expanding eye care industry, which is projected to grow at a CAGR of 12-14%, reaching ₹55,000-65,000 crore by FY28. With 165 centres in India and 15 globally, the company offers a wide range of services, including cataract surgeries and optical products, commanding 25% of India's eye care market as of FY24. Dr Agarwal’s also holds a 71.90% stake in its listed subsidiary, Dr Agarwal's Eye Hospital, further strengthening its dominance in the sector.
Financials and Utilization of IPO Proceeds
Dr Agarwal’s Healthcare reported a 30.9% rise in revenue to ₹1,332 crores in FY24. However, its net profit dipped by 7.9% to ₹95 crore due to higher tax expenses. On the positive side, EBITDA grew by 34%, reaching ₹362.3 crore, with EBITDA margins improving to 27.2%.
Debt Reduction and Growth Plans
Reducing debt remains a top priority for Dr Agarwal’s Healthcare, which plans to use ₹195 crores from the fresh issue to reduce its existing debt. The company’s remaining funds will be used for corporate growth initiatives and potential acquisitions. These moves will strengthen the company’s financial health and position it for sustained growth in the coming years, as it seeks to expand both domestically and internationally.
Who’s Behind the IPO?
The IPO is being managed by Kotak Mahindra Capital, Morgan Stanley India, Jefferies India, and Motilal Oswal Investment Advisors—all respected names in the investment banking world.
Conclusion: A Strong Play in the Growing Eye Care Market
Dr Agarwal’s Healthcare has grown into a dominant force in the eye care sector, supported by its wide-reaching network of clinics and strong market share. With a robust financial base and plans to expand both organically and through acquisitions, the upcoming ₹300 crore IPO offers a significant opportunity for investors looking to tap into the booming Indian healthcare market. As the company continues to reduce its debt and invest in future growth, its role as a key player in India’s eye care industry is set to grow even stronger.
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