Buy Healthcare Global Enterprises, target price Rs 330: Axis Securities

Axis Securities has buy call on Healthcare Global Enterprises with a target price of Rs 330. The current market price of Healthcare Global Enterprises is Rs 269. Time period given by analyst is one year when Healthcare Global Enterprises Ltd. price can reach defined target.

Healthcare Global Enterprises Ltd., incorporated in the year 1998, is a Small Cap company (having a market cap of Rs 3773.66 Crore) operating in Hospitals & Allied Services sector.

Healthcare Global Enterprises Ltd. key Products/Revenue Segments include Income from Medical and Healthcare Services, Pharmaceuticals, Other Operating Revenue and Grants for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 360.98 Crore, up 1.61 % from last quarter Total Income of Rs 355.26 Crore and up 29.00 % from last year same quarter Total Income of Rs 279.83 Crore. Company reported net profit after tax of Rs -49.79 Crore in latest quarter.

Investment Rationale
HCG is expected to turn around its operating profitability with Operating EBITDA Margins improving by 680bps over FY21-FY24E, majorly driven by a) Operating leverage driven by the increase in Average Occupancy rates (53%-58%) b) Increase in ARPOB led by the increase in international patients and high end works, and c) Operating leverage in new centers that have already achieved breakeven. Given variable and fixed costs comprise 35% and 65% in hospitals respectively, it believes strong operating leverage in new centers may improve margins to 12%-15% over FY21-FY24E.

Promoter/FII Holdings
Promoters held 71.44 per cent stake in the company as of 31-Dec-2021, while FIIs owned 7.54 per cent, DIIs 6.09 per cent.