Hold Healthcare Global Enterprises, target Rs 320: Edelweiss

Edelweiss Financial Services has hold call on Healthcare Global Enterprises Ltd. with a target price of Rs 320. The current market price of Healthcare Global Enterprises Ltd. is Rs 289.5 Time period given by the brokerage is a year when Healthcare Global Enterprises Ltd. price can reach defined target. Healthcare Global Enterprises Ltd., incorporated in 1998, is a mid-cap pharma company with a market cap of Rs 2542.22 crore.

Investment rationale by Edelweiss
Healthcare Global’s (HCG) Q4FY18 performance was in-line, with top-line growing 22% and EBITDA up 7% YoY. During the quarter, company closed the Kanpur centre, which it had commissioned in Q4FY17. Management estimated that payback and eventual growth would be slower than expected, as most patients came from government schemes. This was the third exit this fiscal, after Delhi in Q2FY18 and Trichy in Q3FY18, which were mainly due to issues with the partner. We liked HCG, being a singular bet on the promise of oncology tertiary care. However, lure of the therapy has attracted fierce competition from private and public players alike. Additionally, introduction of more government subsidy schemes could aggravate margin pressure. We believe the stock is fairly valued at current valuations. Maintain ‘HOLD’ with a TP of INR320.