Buy Healthcare Global Enterprises, target price Rs 575: Axis Securities

Axis Securities has a buy call on Healthcare Global Enterprises with a target price of Rs 575. The current market price of Healthcare Global Enterprises Ltd. is Rs 500.35. Healthcare Global, incorporated in 1998, is a Small Cap company with a market cap of Rs 6972.92 crore, operating in Hospitals & Allied Services sector.

Healthcare Global's key products/revenue segments include Income from Medical and Healthcare Services, Pharmaceuticals, Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 563.21 crore, down -.26 % from last quarter Total Income of Rs 564.67 crore and up 18.34 % from last year same quarter Total Income of Rs 475.94 crore. The company has reported net profit after tax of Rs 6.85 crore in the latest quarter.

The company?s top management includes Dr.B S Ajai Kumar, Ms.Geeta Mathur, Mr.Pradip Kanakia, Mr.Jeyandran Venugopal, Mr.Rajiv Maliwal, Mr.Amit Soni, Mr.Siddharth Patel, Ms.Anjali Ajaikumar Rossi, Mr.Raj Gore, Mr.Rajagopalan Raghavan. Company has B S R & Co. LLP as its auditors. As on 31-12-2024, the company has a total of 14 crore shares outstanding.

Investment Rationale
The cancer industry is growing at a CAGR of 17%, and Healthcare Global Enterprises is outpacing this growth. The company plans to add 900 incrementalbeds over the next 4-5 years to capitalise on emerging opportunities. With most emerging centers now matured and generating margins above 20%, Axis Securities sees multiple levers for margin improvement. Additionally, operating leverage and contributions from MG Hospital are expected to add 300 bps to margins over the next three years.

The brokerage anticipates a 1,000 bps improvement in RoIC for Healthcare Global over the next three years, driven by increased operating profitability. Currently, the stock trades at 13x and 11x EV/EBITDA for FY26 and FY27, respectively. Key Risks: a) Slowdown in commissioning projects. b) Govt. Regulations changes. c) High attrition of clinicals.

Promoter/FII Holdings
Promoters held 71.23 per cent stake in the company as of 31-Dec-2024, while FIIs owned 2.76 per cent, DIIs 12.94 per cent.