Buy HealthCare Global Enterprises: target of Rs 700: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • HCG's sustained healthy growth in Q2FY27 was driven by stronger realisations and patient inflows across key clusters, with the South cluster leading the transition.
  • The company plans to add 938 beds by FY30, comprising 566 brownfield and 372 greenfield beds, which could boost growth.
  • Management expects a mid-to high-single-digit impact on absolute EBITDA from the recent trade-margin restrictions on non-scheduled anti-cancer drugs, but believes it can mitigate the impact post FY28.
  • HCG's EBITDA margin is expected to improve by 30bps to 18.7% in FY29E, driven by higher volumes, trade-channel optimisation, and operating efficiencies.

Thesis Validation Checklist

  • Investors should watch for HCG's ability to maintain its growth momentum, driven by healthy patient inflow and better contribution from complex oncology treatments.
  • The company's ability to mitigate the impact of trade-margin restrictions on non-scheduled anti-cancer drugs will be crucial in maintaining its EBITDA growth trajectory.
  • HCG's expansion plans, including the addition of 938 beds by FY30, will be critical in driving long-term growth.
  • The company's ability to improve its EBITDA margin, driven by higher volumes and operating efficiencies, will be key to maintaining its profitability.