Healthcare Global Enterprises - Company Update - ICICI Direct

Signs of a strong recovery amid sharp sequential growth of 28%, 75% in revenues, EBITDA, respectively, in Q2FY21, normalisation of OPD/IPD inflows as travel restrictions ease out point towards a better H2FY21 vis-à-vis H1FY21. The domestic business has already reached near pre-Covid levels on the back of strong growth seen in Tier-II/III cities. Furthermore, revival of inter-state travel and resumption of medical tourism from neighbouring countries (like Bangladesh) is likely to reach pre-Covid levels by the end of FY21, which will further support financials.

Valuation & Outlook

HCG has utilised proceeds from the QIP (Rs. 651 crore) by CVC for 1) de-leveraging of balance sheet (53% net debt reduction ex-capital leases in Q2) and 2) acquisition of the remainder 49.9% stake of Milann fertility centres (BACC Health Care Pvt Ltd) for Rs. 68.3 crore. It has recently appointed Raj Gore (ex-CEO - Southern region of Apollo Hospital) as CEO, which bodes well for the company. HCG, with its integrated, one-stop-solution and focused model, is well poised to capture the growing potential with pan-India focus on cancer therapy. De-leveraging of balance sheet, reduction of losses across new centres has substantially eased legacy overhangs. That said, the recent sharp rally in the stock (~40% up in a month) has well captured these positives. Weaker return ratio profile still remains a key concern for the stock. We change our recommendation from BUY to HOLD with a revised target price of Rs. 170 (13x FY23E EV/EBITDA). Moderation of capex and improvement in return ratios would remain key monitorables.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HCG_CoUpdate_Dec20.pdf

Shares of HealthCare Global Enterprises Ltd was last trading in BSE at Rs.168 as compared to the previous close of Rs. 171.35. The total number of shares traded during the day was 44481 in over 2266 trades.

The stock hit an intraday high of Rs. 175.6 and intraday low of 168. The net turnover during the day was Rs. 7641803.

Source : Equity Bulls

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