Research Report on Dr. Agarwal’s Healthcare

by Motilal Oswal Securities

Analysis – August 2025
Sector: Pvt Sector Bank
Price on Analysis date: Rs. 440
Target Rs. 530
(20% Upside potential)
Target Period:

Merger synergies to drive EPS accretion
The completion is expected in 12-24 months, subject to approvals
 The proposed merger of Dr. Agarwal Eye Hospital (AEHL) with Dr. Agarwal
Healthcare (AHCL) would consolidate the businesses of AHCL and AEHL into
a single entity.
 This merger would drive better operational and financial efficiency,
enhancing the value of overall business through unified capital allocation.
 With this merger, on pro forma basis, the minority interest related to a 28%
stake of public shareholding in AEHL will be eliminated. The total number of
equity shares of AHCL would increase due to the issuance of new shares to
AEHL. This transaction would be EPS-accretive for AHCL by 5-7% for FY27.
 AHCL remains on track to a) expand its pan-India presence, b) enhance its
hub-spoke model network, c) provide superior technology service in eye
care, and d) gain market share in the fragmented eye-care industry. We
value AHCL on an SOTP basis (25x EV/EBITDA for the surgery business, 15x
EV/EBITDA for the opticals business, 13x EV/EBITDA for the pharmacy
business, adj for a stake in Dr. Agarwal Eye Hospital/Thind hospital) and
arrive at a TP of INR530. Maintain BUY.

Merger details
 The boards of directors of AHCL and AEHL have approved the scheme of
amalgamation of AEHL with AHCL, creating a single listed entity housing the
entirety of Dr. Agarwal’s operations.
 Moreover, AEHL is proposing a preferential allotment of INR700m to AHCL
to finance ongoing capex requirements.
 As part of this, AEHL will issue ~2.7% of its post-issue capital to AHCL
through the preferential allotment at INR5,270/share, amounting to
INR700m. This will be followed by the merger of AEHL into AHCL via the
scheme of amalgamation.
 Under the proposed merger terms, shareholders of AEHL (excluding AHCL)
will receive 23 equity shares of AHCL for every 2 equity shares held in
AEHL, representing a 15% premium to AEHL’s 10-day VWAP.
 The merger will be subject to requisite approvals from shareholders, stock
exchanges, SEBI, and the NCLT.

Timeline snapshot
 2QFY26: The boards of AHCL and AEHL approved the proposed merger
scheme. The shareholders’ meeting to consider approval for the preferential
issue will be held during the quarter.
 3QFY26: Stock exchange approval expected; preferential issue is expected to
be completed.
 4QFY26: Shareholders’ and creditors’ meetings to consider approval of the
merger scheme.
 2QFY27: NCLT order expected, enabling the listing and trading of new
shares.

EPS-accretive for AHCL shareholders
 Currently, AHCL holds a 71.9% stake in AEHL. Accordingly, the financials of AEHL
are consolidated within AHCL and the minority interest related to 28.1% public
shareholding is deducted for calculating PAT post minority interest.
 After the merger, this minority interest related to AEHL would be eliminated.
Subsequently, the total number of equity shares would increase to 331m due to
the issuance of new shares to AEHL public shareholders.
 Considering both aspects, our FY27 EPS estimate would increase by 5-7%.

Valuation and view
 Currently, on pre-merger basis, we estimate a CAGR of 20%/21%/39% in
revenue/EBITDA/PAT over FY25-27.
 AHCL is enhancing its services at the existing centers to cater to increased
requirements of patient pool. Additionally, it is making in-roads to new micro
markets to further intensify the growth prospects.
 Also, it is expanding its doctor pool to cater to rising demand within eye-care.
Maintain BUY.

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