Latest News
-
Bajaj Group Stock Declares Rs. 60/Share Dividend: Buy Ahead of Record Date On 28 June? -
Rs 45/Share Dividend: Record Date In Due Course; Buy The IT Stock For Dividend Eligiblity? -
175% Dividend: TATA Group Stock Declares Q4 Results; Buy The Rekha Jhunjhunwala Portfolio Stock? -
2:15 Bonus: Tata Group's Penny Stock Below Rs 90, Gives 2,821% Returns In 5 Years: Announces Q4 Report Card -
Rs. 240/Share Dividend: May 7 Fixed As Record Date; Buy The IT Stock To Be Eligible? -
1:5 & 1:2 Split, Rs 6/Sh Dividend: Fertilizer Stock Coming Up With 600% Payout; Record, Payment Dates Fixed -
Cube Highways Trust Set to Acquire Seven Highway Assets Worth Rs 5,172 Crore -
1:10 Split, Rs 51 Dividend: Accumulate Tata Stock, TP Rs 170; Big Update On £1.25 Bn Investment -
Tech Mahindra Sets Three-Year Plan for Robust Growth and Market Leadership by FY27 -
Tech Mahindra Q4 Net Profit Falls 41%, Announces Growth Strategy
This Healthcare Stock Jumps Over 19% In 1 Month, Axis Securities Sees More Upside
Healthcare Global Enterprises (HCG) is India's leading cancer care company. Over 26 comprehensive cancer centres are part of the company's network throughout India. On the NSE, the company's shares have risen 50.43 percent in a year, and the stock has gained 11.02 percent year-to-date (YTD). The stock has gained 14.21 percent in the previous six months, and 19.22 percent in the last month. Axis Securities has issued a buy call on the stock with a target price of Rs 330, compared to the current market price of Rs 272.85 as of 9:55 IST on March 29, 2022.
Investment rationale for HCG as per Axis Securities
- Oncology, with a 13% CAGR over FY16-19, is the fastest growing industry in the Healthcare market. The size of the Oncology industry is ~Rs 165 Bn and reports 1.5 Mn new cases every year. HCG has been outpacing the industry growth with revenue CAGR of 19% and new patients' registration CAGR of 24.6% over FY16-FY19. The company has set up a strong network of 25 centers across the country which stands 2x the capacity of the immediate competitor. We believe HCG is well-placed to grow new patient registrations backed by its competitive strengths such as high-end works, strong brand recall, easily access to centers, and reasonable prices.
- HCG's ARPOB reached Rs 38,345 (+21.9% Q3FY22 YoY) due to high end works such as robotic surgery and Cyberknife in Oncology verticals of Head & Neck, Urology, Bone Marrow transplantation, Liver Surgery and complicated tumours. Furthermore, the increase in the volume of international patients may improve ARPOB (Waned Covid-19 impact) in the upcoming quarters. (International patients comprise 2% of the sales now which was 6% before the Covid-19 pandemic). We believe the current ARPOB are sustainable and may report a CAGR of 10% over FY21-FY24E.
- HCG is expected to turn around its operating profitability with Operating EBITDA Margins improving by 680bps over FY21-FY24E, majorly driven by a) Operating leverage driven by the increase in Average Occupancy rates (53%-58%) b) Increase in ARPOB led by the increase in international patients and high end works, and c) Operating leverage in new centers that have already achieved breakeven. Given variable and fixed costs comprise 35% and 65% in hospitals respectively, we believe strong operating leverage in new centers may improve margins to 12%-15% over FY21-FY24E.
Buy for a target price of Rs 330
Attractive valuations, macro-economic tailwinds, encouraging growth opportunities, company-specific triggers, and sector-specific attributes, according to the brokerage, remain the stock's key positives. "We recommend BUY with a TP of Rs 330/share," said Axis Securities.
Disclaimer
The stock has been picked from the brokerage report of Axis 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.
