Dr Agarwal’s parent gets more money from TPG and Temasek

Dr Agarwal’s Health Care Ltd (DAHCL) is the parent of Dr Agarwal’s Eye Hospital Ltd (DAEHL).

  • DAEHL is the listed entity in which currently DAHCL owns 71.75%.
  • DAEHL is into eye care and related businesses, majorly in Tamil Nadu. DAHCL whereas is into eye care hospitals, opticals, pharmacies and other related services across the country, majorly through hospitals in South India and Maharashtra. DAHCL had also acquired Orbit in FY2017 to provide eye care related services through hospitals located in Southeast Asia and Africa.
  • DAEHL’s trailing 12 mths revenues are Rs 279 cr whereas DAHCL is projected to close the current FY24 at Rs 1,500 cr of revenues. This implies DAEHL accounts for about 25% of DAHCL’s total revenues. Difference of profits will be on similar lines.
  • DAHCL is planning to separately go for it’s own listing in the next 2-3 years

Now with this background, please consider the subject announcement. Further details are as follows –

  • TPG and Temasek, the existing investors are infusing further Rs 650 cr in DAHCL
    • In May 2022, both had infused Rs 1,200 crore into DAHCL
  • The new funding round is mentioned to have valued DAHCL at Rs 6,000 cr
    • For comparison – the listed entity i.e., DAEHL before this deal announcement was valued at Rs 900 cr
    • How to translate DAHCL’s valuation into DAEHL’s valuation is difficult for me at this stage.
  • The funding is for DAHCL to fund it’s own expansion plans. How much of that will flow into DAEHL (if at all) is not mentioned.
    • Last year’s funding flow out of Rs 1,200 cr into DAEHL is not ascertainable. Atleast on DAEHL’s balance sheet and cash flows I could not see anything.

For the time being, I will not consider the subject transaction to have any material impact on DAEHL’s prospects or valuations.

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