The shares of the largest cancer care provider fell 0.60 percent despite ICICI Direct, a well-known brokerage recommending a ‘Buy’ rating.
With a market capitalization of Rs 4,625.11 crore, the shares of HealthCare Global Enterprises Ltd were trading at Rs 332.05 per share, decreasing around 0.60 percent as compared to the previous closing price of Rs 334.05 apiece.
Looking into HealthCare Global Enterprises Ltd, the company’s revenue increased by 11 percent, from Rs 424.68 crore in Q3FY23 to Rs 469.87 crore in Q3FY24. During the same period, net profit declined by 18 percent, from Rs 4.20 crore to Rs 3.43 crore.
ICICI Direct, one of the well-known brokerages in India, gave a ‘Buy’ call on the pharma stock with a target price of Rs 435 apiece indicating a potential upside of 30 percent from Tuesday’s price of Rs 334.05 per share.
Here’s the rationale for the probable upward target of 29%:
● Q3FY24 witnessed robust revenue growth of 11% year-on-year (YoY), reaching Rs 470 crore. This growth was primarily driven by a 19% increase in emerging centers and an 8% rise in matured centers, indicating a diversified revenue stream across various regions.
● In Q3FY24, despite robust revenue growth, EBITDA increased by only 4% YoY to Rs 79 crore. This subdued growth was attributed to higher employee costs, increased expenses, and lower occupancy rates, influenced by the Chennai floods and operational scaling back in Bengaluru hospitals. However, EBITDA margin remained stable at 16.7%.
● The management of HCG foresees EBITDA margins reaching approximately 20% through operational enhancements, such as optimizing the case mix and enhancing occupancies and payee mix. Moreover, sustained Average Revenue Per Occupied Bed growth is anticipated, driven by technological advancements and enhancements in emerging healthcare centers.
● HCG is expanding its bed capacity by approximately 350 beds across various cities, including Ahmedabad, Baroda, Bangalore, and Indore. This expansion aims to cater to the growing demand for healthcare services in these regions, positioning HCG for future growth.
Healthcare Global Enterprises Ltd is in the business of establishing and maintaining hospitals, as well as medical diagnostic services such as scientific testing and pharmaceutical consulting.
Written by:- Abhishek Singh
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