Target: ₹518
CMP: ₹432.45
With three generations of the promoter family involved in comprehensive eye care services, Dr Agarwals Health Care (DAHL) has built one of the largest eye care franchises (221 facilities as of Dec 24). DAHL offers a comprehensive range of services, including surgeries (65 per cent of revenue), consultation (14 per cent) and products such as opticals (13 per cent)/pharmaceuticals (8 per cent).
The latent demand for eye care (industry CAGR likely to be 12-14 per cent over FY24-28), coupled with DAHL’s efforts to treat more patients at existing centers as well as add new centers, is expected to drive industry outperformance over the next five years.
DAHL has delivered a robust revenue/EBITDA CAGR of 38/41 per cent over FY22-24 aided by organic as well as inorganic growth levers. We expect a 21/23 per cent revenue/ EBITDA CAGR, reaching ₹2,490 crore/₹690 crore over FY25-27, fueled by a 19 per cent CAGR in surgical volumes, a 20 per cent CAGR in pharmacy revenues, and stable operating profitability.
We value DAHL on a SoTP basis (premised on 24x 12M forward EV/EBITDA for the surgery/consultancy businesses, 14x EV/EBITDA for the optical business, 12x EV/EBITDA for the pharmacy business, and adjusted for a non-promoter stake in Dr Agarwals Eye Hospital (AEHL) and Dr Thind) to arrive at our TP of ₹510. Initiate coverage with a Buy rating.
