Revenue Grew To Rs 163 Cr, Buy This Multi-Specialty Hospital Chain Stock For 40% Upside: ICICI Direct

ICICI Direct, in its brokerage report published on 03 June 2022 has given a 'buy' rating to Shalby Ltd., a multispecialty hospital chain, for a target price of Rs 160. Recently the Shalby acquired US-based Consensus to diversify into related implant business besides supporting arthroplasty and orthopaedic segments. Shalby Ltd at its meeting held last month on 25 May 2022 has recommended a final dividend, which will be paid subject to the approval of members in the ensuing 13th Annual General Meeting of the Company.

Stock Overview: CMP, Target Price, Potential Returns, 52 Week Low & High

The share price of Shalby Ltd on June 2, 2022, closed at the Current Market Price (CMP) of Rs 114.70, a decline of 1.59%. It was opened at Rs 118.25, whereas the previous close was 116.55. With the estimated target price of Rs 320, set by the brokerage and the CMP, Shalby Ltd has the potential to gain 40% in 12 months. It recently touched the 52 week low at Rs 100.20 on 26 May 2022, while its 52 week high is Rs 214.40 touched on 10 August 2021.

Q4FY22 Results

Strong 11% YoY increase in-patient count along with 1.6% YoY growth in surgeries. Revenues grew 12% YoY to Rs 163 crore. EBITDA was at Rs 24 crore, a dip of 23% YoY with margins at 14.8%. Adjusted PAT was at Rs 10.2 crore (growth of 4% YoY).

Revenue-wise breakup FY22: anthroplasty:29%, critical care & general medicine: 22%, orthopaedic: 8%, oncology:9%, cardiac science: 8%, neurology 5%, nephrology:3%, others:16%. Shalby registered a blended ARPOB of Rs 31,347 and ALOS of 4.55 days (without day care procedures) in FY22.

Buy for a target price of Rs 160

Shalby Ltd's share price has grown by ~0.95x over the past three years (from ~Rs 123 in June 2019 to ~Rs 117 levels in June 2022).

"We maintain BUY due to 1) consistency in operational performance from hospitals, 3) focus on the asset-light model via franchisee push and 3) foray into implants likely to provide integration advantage and third party push. We value Shalby at Rs 160 based on SOTP valuation," the brokerage has said.

Key triggers for future price performance

Shalby Ltd is a market leader in arthroplasty procedure with ~15% market share of all joint replacement surgeries by organised private corporate hospitals. Diversification of arthroplasty and orthopaedics with cardiac science, oncology and neuroscience, additional 40% bed capacity available to support organic growth. Re-establishment of implant business in core markets while creating a platform to enter growth markets with a goal of Rs 100 crore revenue in FY23. Set on an inspirational target to achieve 2.5x sales in the next three to five years on the back of expansion to 50 franchises in the next three years, better occupancies and new service offerings (home care & Shalby Care cards).

About Company - Shalby Ltd.

Shalby Limited (Shalby Hospitals), established by Dr Vikram I. Shah in 1994 in Ahmedabad, Gujarat, operates a chain of multispecialty hospitals across India, holding an aggregate bed capacity of over 2000 hospital beds. The business of the company is to offer tertiary and quaternary healthcare services to patients in various areas of specialization such as orthopaedics, complex joint replacements, cardiology, neurology, oncology, rental transplantations, etc.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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. Goodreturns.in advises users to check with certified experts before taking any investment decisions.