Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Research Analyst Contact Details:
Address: A-412, Shilp Aaron, Sindhu Bhavan Road, Ahmedabad, Gujarat - 380059
Email: services@yellowstoneequity.com
Mobile: +91-7575817289

Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

HealthCare Global Enterprises / Equity Bottom-Up

<ul>
<li>Despite Q3 being seasonally weak, <a href="https://www.smartkarma.com/entities/healthcare-global-enterprises-limited" target="_blank" data-smartkarma-citation="entities:23983:1" rel="noopener">HealthCare Global Enterprises ("HCG")</a> reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.</li>
<li>HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.</li>
<li>With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.</li>
</ul>


Despite Q3 being seasonally weak, HealthCare Global Enterprises ("HCG") reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.
HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.
With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.


HCG: FY25 and FY26 Set To Be Defining Years

<ul>
<li>HCG reported a strong Q2FY4 with revenue growth of 16% YoY and 5.7% QoQ. EBITDA margin expanded 120bp QoQ to reach 17.8%.</li>
<li>Emerging centers are scaling up well with revenue growing at 29% YoY in Q2FY24. Matured centers' revenue also grew at a healthy pace of 13% YoY.</li>
<li>HCG is continuing to upgrade infrastructure of existing hospitals. It added 3 robotic surgery machines across 3 centers. It operationalized 4 new LINACs and plans to install six more LINACs. </li>
</ul>


HCG reported a strong Q2FY4 with revenue growth of 16% YoY and 5.7% QoQ. EBITDA margin expanded 120bp QoQ to reach 17.8%.
Emerging centers are scaling up well with revenue growing at 29% YoY in Q2FY24. Matured centers' revenue also grew at a healthy pace of 13% YoY.
HCG is continuing to upgrade infrastructure of existing hospitals. It added 3 robotic surgery machines across 3 centers. It operationalized 4 new LINACs and plans to install six more LINACs. 


HCG: Scaling Up Well | On Track for a Solid FY25

<ul>
<li>HCG's cancer segment reported decent revenue growth of 14% YoY in Q1FY24. EBITDA margin came in weaker than expected due to a few transient adverse factors.</li>
<li>HCG is hitting all the right notes to drive growth. It is beefing up clinical talent to attract patients. It is also making strategic tuck-in acquisitions to expand its presence.  </li>
<li>As cancer treatment is becoming more advanced, the mix of immunotherapy and hi-tech treatment is growing, helping the realization and the profitability to improve.</li>
</ul>


HCG's cancer segment reported decent revenue growth of 14% YoY in Q1FY24. EBITDA margin came in weaker than expected due to a few transient adverse factors.
HCG is hitting all the right notes to drive growth. It is beefing up clinical talent to attract patients. It is also making strategic tuck-in acquisitions to expand its presence.  
As cancer treatment is becoming more advanced, the mix of immunotherapy and hi-tech treatment is growing, helping the realization and the profitability to improve.


HCG: Hitting All The Right Notes To Scale Up

<ul>
<li>HCG ended FY23 with decent profitability and is on track to see significant scale up over the next 12-18 months as its emerging centers become mature.</li>
<li>During the course of the next couple of years, HCG is also looking to enhance its presence through the inorganic route.</li>
<li>We project that HCG may do a PAT of INR 200cr by FY25. At the current market cap of INR 4450cr, HCG is attractively valued at 22x per FY25E PAT. </li>
</ul>


HCG ended FY23 with decent profitability and is on track to see significant scale up over the next 12-18 months as its emerging centers become mature.
During the course of the next couple of years, HCG is also looking to enhance its presence through the inorganic route.
We project that HCG may do a PAT of INR 200cr by FY25. At the current market cap of INR 4450cr, HCG is attractively valued at 22x per FY25E PAT. 


HCG: Emerging Centers Are Inching Closer to Maturity

Global Healthcare Analyst

Tina Banerjee

Aster DM Healthcare Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aster-dm-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:23662:1" rel="noopener">Aster DM Healthcare Ltd (ASTERDM IN)</a> shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).</li>
<li>GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.</li>
<li>Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.</li>
</ul>



Aster DM Healthcare Ltd (ASTERDM IN) shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).
GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.
Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.


Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point

India

HealthCare Global Enterprises Limited provides medical and surgical hospital services. The Hospital offers cancer care, chemotherapy, cyberknife surgery, surgical, radiation, and medical oncology services. HealthCare Global Enterprises operates worldwide.

HealthCare Global Enterprises (HCG IN)

HCG: FY25 and FY26 Set To Be Defining Years

HCG is scaling up well, led by robust demand and its dominant cancer care positioning. At the current valuation, an investment in HCG has potential...

Ankit Agrawal, CFA

HCG: Scaling Up Well | On Track for a Solid FY25

HCG continues to scale up well. At the current valuation, an investment in HCG offers attractive upside potential of 70%+ over a holding period of...

Ankit Agrawal, CFA

HCG: Hitting All The Right Notes To Scale Up

HCG offers an upside potential of 60%+ over the next couple of years, as the business scales up. With cancer treatment becoming more complex, HCG's...

Ankit Agrawal, CFA

HCG: Emerging Centers Are Inching Closer to Maturity

An investment in HCG offers an upside potential of 70%+ over the next couple of years, as its emerging centers mature. We estimate HCG to do a PAT...

Ankit Agrawal, CFA

Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point

Aster DM shares drop after Olympus Capital sells 49M shares at a block deal. Stake sale is not a concern. The company is separating its GCC...

Tina Banerjee

HCG: FY25 and FY26 Set To Be Defining Years

HCG is scaling up well, led by robust demand and its dominant cancer care positioning. At the current valuation, an investment in HCG has potential...

Ankit Agrawal, CFA

HCG: Scaling Up Well | On Track for a Solid FY25

HCG continues to scale up well. At the current valuation, an investment in HCG offers attractive upside potential of 70%+ over a holding period of...

Ankit Agrawal, CFA

HCG: Hitting All The Right Notes To Scale Up

HCG offers an upside potential of 60%+ over the next couple of years, as the business scales up. With cancer treatment becoming more complex, HCG's...

Ankit Agrawal, CFA

HCG: Emerging Centers Are Inching Closer to Maturity

An investment in HCG offers an upside potential of 70%+ over the next couple of years, as its emerging centers mature. We estimate HCG to do a PAT...

Ankit Agrawal, CFA

Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point

​Aster DM shares drop after Olympus Capital sells 49M shares at a block deal. Stake sale is not a concern. The company is separating its GCC...

Tina Banerjee

Aster DM shares drop after Olympus Capital sells 49M shares at a block deal. Stake sale is not a concern. The company is separating its GCC...