Aim Is To Become Debt Free, Opening One Hospital Every Week: Dr Agarwal Health Care | CNBC TV18

Summary

Dr. Agarwal Healthcare is debuting with a ₹3,000 crore IPO, aiming to reduce debt and expand operations. With 209 hospitals and a rapid growth trajectory, the company plans to open one new hospital every week, primarily focusing on eye care across India and Africa. Despite its rapid expansion, the company remains confident in maintaining a healthy margin of 29-30%. Dr. Agarwal emphasized the vast market potential in India, with 275 million people affected by visual impairment. With a solid internal cash flow and continued expansion, Dr. Agarwal Healthcare is poised to serve growing healthcare needs while striving to become debt-free.

Takeaways

• 😀 Dr. Agarwal Healthcare is raising ₹3,000 crores through an IPO, with ₹300 crores as a fresh issue.
• 😀 The IPO proceeds will be used primarily to reduce the company’s debt and for general corporate purposes.
• 😀 The company aims to reduce its debt burden, with ₹195 crores earmarked for debt repayment.
• 😀 Dr. Agarwal Healthcare has raised ₹875 crores through anchor investors including GIC, Tata Mutual Fund, and White O.
• 😀 The company is rapidly expanding, opening one hospital every week, with 45 hospitals opened last year and 30 in the first six months of this year.
• 😀 The healthcare provider operates in 10 countries, including India and Africa, covering half of the world’s population.
• 😀 Dr. Agarwal Healthcare’s growth is driven by its ability to expand horizontally in underserved regions without large inpatient facilities.
• 😀 The company plans to continue expanding without a fixed cap on the number of hospitals, but will focus on meeting India’s significant ophthalmology demand.
• 😀 Dr. Agarwal Healthcare will fund expansion through internal cash flow and doesn’t foresee the need for external capital in the short term.
• 😀 Despite rapid expansion, the company has maintained margins of around 29.5%, with a target to maintain this level of profitability moving forward.
• 😀 Dr. Agarwal Healthcare’s expansion in new markets may increase the break-even period, but its focus on core clusters will support faster profitability.

Q & A

What is the main goal of Dr. Agarwal Healthcare's 3,000 CR IPO?

The primary goal of the 3,000 CR IPO is to reduce the company's debt, with 195 crores allocated specifically to debt repayment. The company aims to become debt-free and is focusing on using these funds to strengthen its financial position.

What percentage of Dr. Agarwal Healthcare's IPO funds were secured from anchor investors?

Dr. Agarwal Healthcare secured 875 crores from anchor investors, which is a significant portion of the 3,000 CR IPO. These investors include prominent players such as GIC, Tata Mutual Fund, and White Oak.

How many hospitals does Dr. Agarwal Healthcare currently operate, and how many are planned to be opened in the near future?

Dr. Agarwal Healthcare currently operates 209 hospitals and aims to open approximately one hospital every week. In the first six months of the year alone, 30 hospitals have been opened.

What are the key advantages Dr. Agarwal Healthcare has in terms of its hospital expansion strategy?

Dr. Agarwal Healthcare's strategy is focused on opening smaller, non-inpatient centers, which allows for faster and more horizontal expansion. This strategy minimizes the need for large inpatient facilities and facilitates rapid growth, particularly in underserved markets.

What is the current CAGR (Compound Annual Growth Rate) for Dr. Agarwal Healthcare?

Dr. Agarwal Healthcare has seen a robust growth rate with a CAGR of approximately 38% over the past three years.

How does Dr. Agarwal Healthcare plan to continue its expansion in terms of regions?

Dr. Agarwal Healthcare is targeting further expansion in regions where it has minimal presence, such as Delhi, Uttar Pradesh, Chhattisgarh, and other parts of northern and central India. The company is focused on capturing underserved markets.

What are the key metrics related to India's ophthalmology sector that Dr. Agarwal Healthcare is targeting?

India has 275 million people affected by some form of visual impairment, with a significant shortage of ophthalmologists. The country has only 1.8 to 1.9 ophthalmologists per 100,000 people, whereas the requirement is 8 to 9 per 100,000. This creates a significant opportunity for Dr. Agarwal Healthcare to expand its services.

What is the typical capital expenditure (CAPEX) for different types of hospitals within Dr. Agarwal Healthcare?

Dr. Agarwal Healthcare operates three types of hospitals: tertiary hospitals, secondary hospitals, and primary centers. Tertiary hospitals have a CAPEX requirement of 8 to 12 crores, secondary hospitals require 4 to 7 crores, and primary centers (I clinics) cost about 30 lakhs.

How does Dr. Agarwal Healthcare manage to maintain its margins despite rapid expansion?

Despite rapid expansion, Dr. Agarwal Healthcare has maintained its margins at around 29% to 30%. This is largely due to the company's focus on expanding in core regions where the break-even period is faster, helping to stabilize margins even with expansion in new and less familiar markets.

What is the expected growth target for Dr. Agarwal Healthcare in the next two years?

While Dr. Agarwal Healthcare does not commit to doubling revenues or hospital numbers, they are confident that their expansion plans and solid growth record will help them continue at the current growth pace. The company expects its hospital count and revenues to continue growing steadily.