Prabhudas Lilladher has given Buy recommendation for HealthCare Global Enterprises with a target price of Rs. 358 in its research report issued on Aug 11, 2022
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.