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

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

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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.

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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>HCG reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.</li>
<li>Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.</li>
<li>We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  </li>
</ul>


HCG reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.
Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.
We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  


HCG: Executing Well With Prudent Expansion

<ul>
<li>With emerging centers scaling up and established centers growing steadily, HCG's profitability is growing strong. HCG's Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. </li>
<li>With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.</li>
<li>We estimate that by FY26, HCG's PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.</li>
</ul>


With emerging centers scaling up and established centers growing steadily, HCG's profitability is growing strong. HCG's Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. 
With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.
We estimate that by FY26, HCG's PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.


HCG: Emerging Centers Are Scaling Up Well

Global Healthcare Analyst

Tina Banerjee

<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

<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

India

HealthCare Global Enterprises is a leading healthcare provider in India, specializing in comprehensive cancer diagnosis and treatment, including medical oncology, radiation therapy, and surgical oncology. The company also offers fertility treatments under the Milann brand, advanced screening and diagnostic services, and multi-specialty hospital care. It was founded in 1989 (initially as Bangalore Institute of Oncology) and is headquartered in Bangalore, India.

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HealthCare Global Enterprises (HCG IN)

HCG: Executing Well With Prudent Expansion

HCG continues to execute well with scaling up of its emerging centers, brownfield expansion of its core centers and prudent inorganic acquisitions....

Ankit Agrawal, CFA

HCG: Emerging Centers Are Scaling Up Well

Led by scale up and operating leverage, HCG's profitability is growing strong. At the current valuation, an investment in HCG has potential to...

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HCG: Executing Well With Prudent Expansion

HCG continues to execute well with scaling up of its emerging centers, brownfield expansion of its core centers and prudent inorganic acquisitions....

Ankit Agrawal, CFA

HCG: Emerging Centers Are Scaling Up Well

Led by scale up and operating leverage, HCG's profitability is growing strong. At the current valuation, an investment in HCG has potential to...

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

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...