Prabhudas Lilladher's research report on HealthCare Global Enterprises
HCG’s consolidated post IND AS EBITDA grew strongly by 41% YoY (+14% QoQ) to Rs 722mn, above our estimates (Rs606mn). Existing centers reported healthy profitability with EBIDTA growth of 24% YoY (23% QoQ) to Rs750mn, while new centers continue to report highest EBITDA at Rs100mn (Rs154mn in FY22). HCG’s asset light approach with focus on partnering has made its business model – capital efficient and scalable. The company operates most of its Comprehensive Cancer Centre (CCC) on lease/rental basis with HCG investing only in equipment’s. Out of 25 HCG’s CCC, only four are on owned land. HCG is in a consolidation mode and given reducing capex intensity, we expect profitability to improve further from FY23. Our FY23E and FY24E EBITDA stands increase by ~4%. We expect a 28% EBITDA CAGR over FY22- 24E after adjusting for IND AS. At CMP, the stock trades at 14x FY24E EV/EBITDA adjusted for rentals.
Outlook
We maintain ‘Buy’ rating with revised TP of Rs358 (Rs347 earlier) valuing at 18x FY24E EV/EBITDA.
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