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2 Hospitals & Allied Services Sector Stocks To Buy As Suggested By ICICI Securities

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Corporate profits, as well as CPI inflation and industrial output data, which came in after market hours on Friday, will drive the market in the coming abbreviated week. Experts believe that the major indices would trade in a range with a focus on global cues, especially inflation fears. On Gurunanak Jayanti, November 19, the market will be closed. Aster DM and Narayana Hrudayalaya are two companies recommended by ICICI Direct with good upside potential.

 

Aster DM Healthcare

Aster DM Healthcare

Aster DM Healthcare current market price (CMP) is Rs. 208. The brokerage firm has set a target price of Rs. 250 for the shares. In a Target Period of 12 months, the stock is anticipated to return 20 percent.

Q2FY22 Results

  • Good set of data, with sales beating expectations but margins falling short.
  • Sales increased by 10.4% year on year to Rs 2504.3 crore.
  • EBITDA was 342.8 crore, up 26.5 percent year on year, with 13.7 percent margins.
  • As a result, adjusted PAT came in at Rs 106.9 crore.

Target Price and Valuation

"Aster's share price has grown by ~1.2x over the past three years. Maintain BUY with unique blend and favourable restructuring on cards Target Price and Valuation: We value Aster DM at an SOTP of Rs 250," the brokerage has said.

Key triggers for future price performance

  • In the Gulf Cooperation Council (GCC), travel restrictions are being eased, and medical tourism is on the rise.
  • Strong RoCE in GCC due to assets light model, integrated business model, faster occupancy & strong brand equity, healthy ARPOB & targeted strategy Strong RoCE in GCC due to assets light model, integrated business model, faster occupancy & strong brand equity, healthy ARPOB & targeted strategy
  • It is seeking aggressive expansion in both the GCC and India using an assets-light model, but it is still on solid ground thanks to GCC FCF generation.
Narayana Hrudayalaya
 

Narayana Hrudayalaya

Narayana Hrudayalaya current market price (CMP) is Rs. 555. The brokerage firm has set a target price of Rs. 650 for the shares. In a Target Period of 12 months, the stock is anticipated to return 17 percent.

Q2FY22 Results

  • The NHL had a successful second quarter of FY22.
  • Sales increased 9.4% year over year to $ 940.3 crore.
  • EBITDA was Rs 168.9 crore, up 26.3 percent from the previous quarter, with margins of 18 percent.
  • The resulting adjusted PAT was Rs 99.3 crore (up 30.4 percent QoQ).

Target Price and Valuation

"NHL's share price has grown by ~1.7x over the past five years (from ~| 318 in July 2016 to ~| 555 levels in November 2021). Maintain BUY due to return of normalcy in elective procedures post Covid wave besides continuance of steady performance at Cayman Islands hospital Target Price and Valuation: We value Narayana at an SOTP of Rs 650 by valuing matured India & Cayman hospitals at 16x FY23E EV/EBITDA, new hospitals at 2x and other business at 1x FY23E EV/sales," the brokerage has said.

Key triggers for future price performance

  • Travel restrictions are being eased, and medical tourism is on the rise.
  • With an increase in occupancies, new hospitals (SRCC, Gurugram, Dharamshila) could see a reduction in losses.
  • Improvement in numbers as a result of judicious case mix identification (greater emphasis on oncology, transplants, and non-invasive treatments) HCCI Cayman Islands traction, which provides a major additional cushion for the entire scheme of things.
Disclaimer

Disclaimer

The above stocks have been picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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