Buy HealthCare Global Enterprises; target of Rs 800: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • HCG's asset-light approach with a focus on partnerships has made its business model more capital efficient and scalable.
  • The company plans to add ~800 beds over FY27-30E, with ~520 beds in FY28-29, driving growth.
  • HCG enjoys ~14% PRE IND-AS margin, which is lower than its peers, but expects to drive growth through bed expansion, better payor mix, and operating efficiencies.
  • The recent strategic investment by KKR and exit from low-margin fertility business will bring in more operational and financial efficiency.

Thesis Validation Checklist

  • Investors should watch for bed expansion progress, improvement in payor mix, and operating margin expansion over the next 12 months.
  • The company's ability to offset the impact of the trade margin cap on 137 non-scheduled anti-cancer drugs will be crucial.
  • Management's guidance of mid-teens revenue growth and high teens to ~20% EBITDA growth will be closely monitored.