Earkart Ltd.

About Earkart

Incorporated in 2021 in Noida, Earkart manufactures and distributes modern hearing aids and related accessories at affordable prices across India. It supplies products through the Government e-Marketplace and provides hearing aids to ALIMCO. Its manufacturing facility is in Noida, and it is developing a Shop-in-Shop (SIS) model through partnerships with ENT and optical clinics. The company operates 49 SIS clinics across 22 cities.

Earkart IPO Details

Use of Fresh Issue Proceeds

• Working capital: INR 21.10 Cr. is allocated to funding working capital.
• SIS clinic capex: INR 17.33 Cr. is allocated to setting up the SIS business model in ENT and ophthalmic clinics.
• General corporate purposes: INR 0.63 Cr. is allocated to general corporate purposes.

Strengths

• Growing financial performance: Revenue increased from 32 in FY24 to 43 in FY25, while EBITDA rose from 3.6 to 9.8 and PAT from 3.1 to 6.9.
• SIS clinic expansion: The company had 49 clinics across 22 cities. It plans to launch Omni Audiometers in 150 clinics by FY26 and 360 clinics by FY27.
• Remote hearing tests: The in-house Omni Audiometer allows certified audiologists at the company’s head office to conduct audiology tests remotely at partner clinics. Its patent, filed in Jun’22, is pending approval.
• Own and third-party products: Earkart sells its own hearing aids under EQFY, Fame and Radius, as well as third-party brands.
• Experienced promoter: Promoter and MD Rohit Misra has over 30 years of healthcare experience and has held senior roles at Glaxo, Allergan, Lumenis and Starkey Inc.

Business Model

The SIS model works through ENT and optical clinic partnerships. Earkart installs an Omni Audiometer at a clinic; a company audiologist conducts tests remotely, recommends a hearing aid when hearing loss is identified, and can program the device remotely if the patient decides to buy. The company says each audiometer costs ~INR 3.4 Lacs and is paid for by Earkart.

• Clinic rollout: The company plans to install Omni Audiometers in 150 clinics by FY26 and 360 clinics by FY27. It also plans to scale from 49 SIS clinics to 500+ by FY27.
• Sales mix: FY25 sales included 39.68 from own-brand products, 1.99 from third-party brands, 0.15 from SIS own-brand products and 0.58 from SIS third-party products.
• Clinic sales objective: The company targets hearing-aid conversion of 4 nos. per month at each clinic, with an average cost of INR 20k per hearing aid. The report estimates ~INR 10 Lacs per clinic per year and INR 51 Cr. from 510 clinics over 2 years on a conservative basis.

Earkart Key Financials

EBITDA and PAT margins improved over the three reported years. NWC days increased from 55 in FY23 to 193 in FY25.

IPO Valuation and Our View

At the IPO price of INR 135 per share, the issue is valued at 27.0x based on FY25 PAT. Minerva Capital Research Solutions’ recommendation is May Subscribe. The report does not state a target price or expected upside.

INR 135 per share

IPO price

~INR 185.68 Cr.

Implied market capitalisation

27.0x

P/E based on FY25 PAT

May Subscribe

Recommendation

Hearing Aid Market

The report states that the India hearing aid market was valued at $4.2 Bn. in 2023 and is projected to grow at a CAGR of 7.89% to $7.2 Bn. by 2030. It gives the global market as $8.1 Bn. in 2023, projected to reach $12.7 Bn. by 2030 at a CAGR of 6.6%. The report also cites WHO data that India accounted for 15% of the global hearing-loss population of 430 Mn.

Shareholding

Peer Comparison

The report identifies Osel Devices as a listed peer. In FY25, Osel reported operating revenues of 186, compared with Earkart’s 43. Earkart’s FY25 EBITDA margin was 22.7% and Osel’s was 17.9%; their reported P/E ratios were 27.0x and 50.7x respectively.

Key Risks

• SIS execution: The SIS vertical is relatively new and has yet to mature. Earkart plans to expand from 49 clinics to 500+ clinics by FY27.
• Patent and competition: The Omni Audiometer patent is pending approval. The report names Siemens / Signia, Phonak and Starkey among larger players.
• Geographic concentration: The report states that Uttar Pradesh and Delhi accounted for ~77% and 15% of FY25 sales respectively.
• Adoption cycle: The report describes hearing-aid adoption as an industry with slow decision making.
• Working capital: NWC days rose from 55 in FY23 to 193 in FY25, while receivable days increased to 157 in FY25.

Management

Promoter and MD Rohit Misra has over 30 years of experience in healthcare and held senior roles at Glaxo, Allergan, Lumenis and Starkey Inc. The report states that CFO Ajay Kumar Giri and Director Rahul Salesha were both previously with Starkey Laboratories India Pvt. Ltd.

Our View

Earkart’s FY25 financials showed higher revenue and margins, and the company is seeking to grow its clinic-based SIS channel. The key uncertainties include scaling a new model, pending patent approval and concentrated sales. Minerva Capital Research Solutions’ IPO recommendation is May Subscribe.

Standard disclosures

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