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.

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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'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

Global Healthcare Analyst

Tina Banerjee

Rainbow Children's Medicare / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rainbow-children-s-medicare-limited" target="_blank" data-smartkarma-citation="entities:35874:1" rel="noopener">Rainbow Children's Hospital (RAINBOW IN)</a> recorded 21% YoY revenue growth in Q1FY24 to INR2.9B, driven by increase in pediatric surgical cases and deliveries, and addition of new bed capacities.</li>
<li>Lower occupancies in new hospitals and higher expenses impacted profitability. In Q1FY24, EBITDA margin declined 407 bps YoY to 30.5%, while net profit margin contracted 190 bps YoY to 14.4%.</li>
<li>The company will add 270 beds in the current financial year. By FY27, RCML aims to increase its bed capacity by 56% to 2,585 from current bed capacity of 1,655.  </li>
</ul>



Rainbow Children's Hospital (RAINBOW IN) recorded 21% YoY revenue growth in Q1FY24 to INR2.9B, driven by increase in pediatric surgical cases and deliveries, and addition of new bed capacities.
Lower occupancies in new hospitals and higher expenses impacted profitability. In Q1FY24, EBITDA margin declined 407 bps YoY to 30.5%, while net profit margin contracted 190 bps YoY to 14.4%.
The company will add 270 beds in the current financial year. By FY27, RCML aims to increase its bed capacity by 56% to 2,585 from current bed capacity of 1,655.  


Rainbow Children's Hospital (RAINBOW IN): Started FY24 On Strong Note; Capacity Expansions Underway

<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

<ul>
<li>HCG continues to scale up well as its new centers are maturing. Its mature centers are also growing at a healthy pace.</li>
<li>Margins are improving across the board led by 1) Realization Improvement 2) Operational Efficiencies 3) Operating Leverage and 4) Improving Mix of Cases.</li>
<li>FY24 is all set to be a defining year in terms of HCG's financial performance across growth and profitability.</li>
</ul>


HCG continues to scale up well as its new centers are maturing. Its mature centers are also growing at a healthy pace.
Margins are improving across the board led by 1) Realization Improvement 2) Operational Efficiencies 3) Operating Leverage and 4) Improving Mix of Cases.
FY24 is all set to be a defining year in terms of HCG's financial performance across growth and profitability.


HCG: Firing On All Cylinders - All Set For FY24 To Be A Defining Year

<ul>
<li>HCG posted decent revenue growth in Q2FY23. Its new centers also saw improved profitability with scale.</li>
<li>HCG has been rolling out price increase across its network which alone should help it to expand margins by 100-150bp in FY24.</li>
<li>With new centers maturing, HCG is gearing up for a stellar FY24 and FY25. As per our estimates, HCG is on track to post FY25 PAT of INR 170cr+.</li>
</ul>


HCG posted decent revenue growth in Q2FY23. Its new centers also saw improved profitability with scale.
HCG has been rolling out price increase across its network which alone should help it to expand margins by 100-150bp in FY24.
With new centers maturing, HCG is gearing up for a stellar FY24 and FY25. As per our estimates, HCG is on track to post FY25 PAT of INR 170cr+.


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: 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

Rainbow Children's Hospital (RAINBOW IN): Started FY24 On Strong Note; Capacity Expansions Underway

Rainbow recorded an impressive 21% YoY revenue growth to INR2.9B in Q1FY24, driven by increase in pediatric surgical cases and deliveries. The...

Tina Banerjee

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

HCG: Firing On All Cylinders - All Set For FY24 To Be A Defining Year

HCG is set up well to deliver a strong performance in FY24. At current valuation, it offers an upside potential of 90%+ over the next couple of years.

Ankit Agrawal, CFA

HCG: All Set for a Stellar FY24

HCG is all set to post strong earnings for FY24 and FY25 as its new centers continue to mature. Earnings growth should also be assisted by 300...

Ankit Agrawal, CFA

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