Hold HealthCare Global Enterprises; target of Rs 525: ICICI Securities

Hold

ICICI Securities research report on HealthCare Global Enterprises

HealthCare Global Enterprises’ (HCG) current promoter CVC Capital (Aseco PTE) is likely to sell up to 54% of its stake in the company to another private equity (PE) firm, KKR, at an agreed price of INR 445/share (cumulative value between INR 320bn–339bn). As per the deal, KKR would initially buy 51% stake from CVC and may further buy 3% if its shareholding in the company does not rise above 54% post the mandated open offer (priced at INR 504.41/share). Founder-promoter Dr BS Ajaikumar shall move to a non-executive role and serve as the Chairman of the company. CVC had played a major role in driving operational efficiencies in the company with EBITDA margins scaling up from ~15.7% in FY20 to 17.2% in FY24, while KKR is expected to drive the next leg of growth through M&A and aggressive bed expansion.

Outlook

We lower our rating for HCG to HOLD and maintain the target price of INR 525.

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