Dealer’s name: HealthCare International (Add)

CMP: ₹360.25

HealthCare International Enterprises (HCG) is a market chief in 90 per cent cities the place it has established presence. The corporate is working at an occupancy of ~64% and has been scouting for acquisitions to increase its footprint. In Oct’23, it acquired SRJ Well being Care, a 50 beds most cancers care hospital in Indore, and in July, it acquired 196 beds established most cancers care hospital in Visakhapatnam.

HCG has been specializing in enhancing traction at its rising centres; income at these had elevated at 25 per cent CAGR and EBITDA margin expanded sturdy 590bps to about 11 per cent over FY22-24. Affected person consciousness, affordability of medicines and higher medical outcomes are more likely to profit most cancers care chains like HCG.

We like HCG’s enterprise mannequin given its deal with area of interest oncology providers; nevertheless, challenges like occupancy and ARPOB enchancment, value rationalisation stick with the administration to show the resiliency of its enterprise mannequin. We elevate EBITDA estimates by 6-12 per cent for FY25-26E to think about Vizag hospital acquisition.

Draw back dangers: Larger competitors in oncology and delay in operational turnaround of recent centres.