Dr Agarwal's Eye Hospital Ltd (DAEHL)

Stock Opportunities Untested - but worth a good look
21

@Naval Thanks for clearing this. I guess this is good news, right? Promotor is able to pay back the loans and get equity back.

I am not able to understand the fall though, I guess this is general market condition and the fact that people are preferring value over growth now?

1 Like
22

same here, cant understand the reason for fall, if there any institutional selling or rotation of money from here to the parent company’s IPO?

23

In share holding pattern no of shareholers in Sep 2024 were 4510 and as of Dec 2024 it rose to 15115.

Can anyone explain what can we interpret from this?

24

The Holding company IPO is the reason for this pattern, as People want to participate in IPO through shareholders category.
As per the management, this might be merged with holding, but timeline is not yet decided.

25

Are you sure?? Because Dr Agarwals Health care ltd ( Promoter ) is considered as 1 shareholder as whole.

26

Dr Agarwal’s Healthcare IPO Details including Answers to all Your Queries Issue Dates : 29 January - 31 January Issue Price : 402/- Per Share (GMP : 150/-) Issue Size : 3,027 Crore or 7,53,04,971 Shares (Fresh Issue only 300 Crore) Retail Quota : 1,021.42 Crore (35% of Issue) Shareholder Quota : 45.41 Crore (1.50% of Issue) Record Date for Shareholder Quota : 23 January Those who bought Shares of Dr Agarwal till Yesterday will be considered as Eligible Shareholders.

Source: https://x.com/ipo_agarwal/status/1882453314975273122

2 Likes
27

In share holding pattern no of shareholers in Sep 2024 were 4510 and as of Dec 2024 it rose to 15115.

Can anyone explain what can we interpret from this?

My query is for Dr Agarwal’s Eye Hospital ltd and not about Dr Agarwal’s Healthcare.

2 Likes
28

Let me clarify: Dr Agarwal Eye Hospital promoter is Dr Agarwal Health care. When Dr Agarwal Health care IPO coming there is a portion of IPO allotment is allowed under shareholders category, so people who want to participate in Dr Agarwal Health care IPO have bought Dr Agarwal Eye care stock from market. For more details

Disc: No investments, not related to any YouTube channel above video shared for information only.

3 Likes
29

Saw this post on X today. It has some good broad industry data points
Eg:
Unit economics
Market size
Market fragmentation etc

30

Haven’t understood why is the Subsidiary available at comparatively low valuations (19x EV/EBITDA) compared to hold co which is valued at 28x.

1 Like
31

This is a regional play while the holding company operates pan-India.
Thats why.

3 Likes
32

Yeah Same, Subsidiary is also better on all fundamentals (RoE, RoCE, Growth, etc). Also heard that they are going to merge both the companies. Is there a overhand of that on the Subsidiary?

1 Like
33

Company announced merger. Subsidiary is going to merge with parent entity. For 2 shares of subsidiary, investors will receive 23 shares of parent. At CMP, only 2% difference in share price.
Personal view - Not a great deal for Subsidiary shareholder.

1 Like
34

Subsidiary is available at much cheaper valuations on financial metrics, but then its valuations is reflective of its scale and growth opportunities in that respective region.

I believe it’s a fair call considering the two aspects as outlined below

  1. Subsidiary was available 20% below few days back. Probably markets knew in advance and that is why there was a sudden jump in the stock price couple of days back. So, in all probability most of the investors including myself are getting the parent company 20% cheaper.
  2. Growth opportunities and the scale of the parent company is much larger. Also, there would be synergy benefits at the operating level.

Personally, i would like to be an investor in the parent company so to me it’s a fair deal. As and when the parent company stock price declines for any reasons we can always load up.

2 Likes
35

That’s the funny fact, promoter somehow decided to grow subsidiary only in home state and choose parent to grow other places, suddenly this becomes an unattractive feature. There is no issue with scale and opportunity in subsidiary, its simply the lack of intention. Getting 20% cheaper is not great considering we could have get it at much better fair value [Which the subsidiary very much deserves].

6 Likes
36

For 2 shares of DAEL , one would get 23 shares of DAHL . At today’s closing price , One will buy 2 shares of DAEL for Rs. 9,353.9 and would get 23 shares of DAL worth Rs. 10,258, so a discount of ~9%. But upon merger, DAHL will have to issue 0.48*11.5 = 5.52 cr additional shares for shareholders of DAEL. Today Mcap of DAHL is Rs. 14,102 cr which includes 72.67% of DAEL. So upon merger, on a crude basis, total mcap will be Rs. 14,102 + 27.33% of today’s mcap of Rs. 2260 cr of DAEL = Rs. 14,720 cr roughy as against total shares of 31.7+5.52= 37.22 cr . So effective share price of the merged entity will be Rs. 14,720/37.22= ~ Rs. 395 , implying dilution of ~11%. So basically there is no arbitrage.

2 Likes
37

This calculation is wrong. In market cap, you add only 23% of market cap but for number of shares, you add 100% of shares of subsidiary. If you recalculate with that you will see different price.

Moreover this calculation itself does not make any sense in case of merger. There is no such thing as effective share price in case of merger. For rights issue, you can use this calculation, not for merger.

38

These are crude calculations (based on economic value). Mcap of DAHL already captures 72.67% of DAEL. Management has given swap ratios on the basis of merger synergies only.

39

I am not saying including only 27% of market cap is wrong, I am saying adding 5.52 crore shares in denominator is wrong. You have to add only the shares that belongs to other which is roughly 1.5 crores.

I am not sure how you came to conclusion that there is no arbitrage. Even with today’s price there is 8% arbitrage.

41

Correct - Total shares after merger : 31.7+1.51=33.21 crore shares . No shares are issued for the 72.67% already owned by DAHL (those shares are cancelled on merger).