| Dr. Agarwals Health Care Limited | ||||
| Rating reaffirmed at 'Crisil A+/Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its rating on the bank loan facilities of Dr. Agarwals Health Care Limited (DAHCL) at ‘Crisil A+/Stable’
Crisil Ratings has noted that DAHCL has successfully concluded its Initial Public Offering (IPO), raising a total of Rs. 3,027.26 crores. The IPO comprised a fresh issue of Rs. 300 crores and an Offer for Sale (OFS) of Rs. 2,727.26 crores. Subsequently, the company's shares were listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), effective February 4, 2025.
The ratings reflect the established market position, strong brand recall in the eye care segment and its healthy financial risk profile. These strengths are partially offset by competition from other hospitals/standalone clinics and exposure to risks related to ramp up and stabilization of operations in newly added centers. |
Analytical Approach For arriving at the ratings, Crisil Ratings has combined the business and financial risk profiles of DAHCL, Dr. Agarwal’s Eye Hospital Limited (DAEHL), Orbit Healthcare Services (Mauritius) Limited (Orbit), Elisar Life Science Private Limited, and Aditya Jyot Eye Hospital Private Ltd. This is because all these entities, together referred to as the Dr. Agarwal’s Health Care group, operate in the same industry and have operational and financial linkages. Debt includes lease liabilities, following adoption of Ind AS 116. Crisil Ratings has further amortized the goodwill acquired till FY24 for over a period of 10 years.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation |
Key Rating Drivers & Detailed Description Strengths: Established marked position with a strong brand recall: DAHCL has a strong presence in the eye care industry and operates under the brand “Dr. Agarwal’s Eye Hospital”. As of September 30, 2024, DACHL has 193 Facilities in India spanning 14 states and 4 union territories, and 16 Facilities spread across nine countries in Africa. DAHCL provides a comprehensive range of eyecare services and products, covering cataract surgeries, refractive treatments; and other services, such as consultations, clinical investigations and non-surgical treatments; and optical and eyecare related pharmaceutical products. The group’s established market position and a strong brand recall in the market would continue to support its business risk profile.
Healthy financial risk profile: The group’s adjusted net worth is Rs. 1,333 crores (after adjusting for amortization of goodwill) as of March 31, 2024. The gearing ratio is ~0.72 times as of March 31, 2024. Debt protection metrics are comfortable, with OPBDIT coverage of over 3.5 times for FY2024. Going forward, an increase in net worth and improvement in capital structure is expected with healthy accretion to reserves backed by improved profitability. During the period ended 30th September 2024, the promoters have infused funds of around Rs. 379 crores in the form of Compulsorily Convertible Preference shares. Furthermore, with the fresh issue of Rs. 300 crores, the networth is expected to increase, enabling it to expand its capabilities and reinforce its market presence. Debt protection metrics are expected to remain comfortable over the medium term.
Weakness: Competition from other hospitals and other standalone clinics: The Group faces competition from a large number of public facilities, private facilities, clinics and private practitioners located in the same geographic areas in which it operates.
Exposure to risks related to ramp up and stabilization of operations in newly added centers: The group is exposed to risks related to ramp up and stabilization of operations in its newly added centers. Any delay in the ramp-up and stabilization of operations in its new centers, can adversely impact the financial risk profile, particularly liquidity. |
Liquidity: Strong The group generated cash accruals of over Rs.260 crores in fiscal 2024 and its future cash accruals would be sufficient against term debt obligations over the medium term. As of March 2024, the group had cash and cash equivalents of around Rs. 112 crores. The current ratio is healthy at around 2 times on March 31, 2024. |
Outlook: Stable Crisil Ratings believes the group will continue to benefit from strong market position and healthy brand recall over the medium term. |
Rating Sensitivity Factors Upward factor * Significant revenue growth while maintaining operating profitability above 23%, thereby benefiting cash generation. * Maintenance of strong financial risk profile, including sustenance of gross debt (including lease liabilities) to Ebitda ratio.
Downward factor * Significant decline in revenue growth rate or operating margin falling below 18% owing to delay in ramp up of centres. * Debt funded capex or acquisitions resulting in weakening of financial risk profile. |
About the Group Incorporated in 2010, DAHCL provides a comprehensive range of eyecare services, including covering cataract, refractive and other surgeries; consultations, diagnosis and non-surgical treatments; and sell optical and eyecare related pharmaceutical products. As of September 30, 2024, the group has 193 Facilities in India spanning 14 states and 4 union territories, and 16 Facilities spread across nine countries in Africa.
The group is led by Chairman, Dr. Amar Agarwal, who has more than 35 years of clinical experience in the eyecare services industry, and an experienced management team comprising of Dr. Adil Agarwal - Chief Executive Officer, Dr. Anosh Agarwal - Chief Operating Officer, Dr Ashvin Agarwal – Chief Clinical Officer and Dr Ashar Agarwal - Chief Business Officer.
Incorporated in 1994, DAEHL is engaged in the business of providing eye care and related business, majorly in Tamil Nadu. DAEHL is listed on BSE Limited. DAHCL holds 71.90 percent of the shareholding in DAEHL as of December 2024.
Orbit was acquired by DAHCL in fiscal 2017 and is engaged in providing eye care related services through hospitals located in Southeast Asia and Africa.
In 2021, DAHCL acquired Aditya Jyot Eye Hospital Private Ltd and as of September 2024, have 75.50 percent ownership in the company. |
Key Financial Indicators
*Crisil Ratings-adjusted numbers. Net worth has been adjusted for intangible assets such as goodwill. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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