Healthcare Global Enterprises

Healthcare Global Enterprises more popularly known as HCG, is the country's largest provider of cancer care and has 14 cancer centres spread across the country.

The company boasts some of the most advanced mechanisms in cancer care, through all these centres that it has. In fact, for the first time in India, HCG has introduced Flattening Free Filter (FFF) Technology for radiation. With the FFF, dose rates of 2400(as compared to 600 or below in filtered beam) can be given. Beam on time gets reduced from one third to one fourth. The treatment time in delivering doses will come from minutes to seconds.

Milaan Fertility Centre

HCG also owns the Milann Fertility centres. Milaan is a specialist provider of fertility treatment in India. Milann has created a reputation of treating high-complexity cases.

Milann has also trained hundreds of reproductive medicine and fertility specialists over the years.

This is again a high growth area, that helps couples, who are struggling to have children. Again, an area that is under penetrated even in the cities.

HCG Trading Near IPO Price

Shares in HCG, which were offered at a price of Rs 218, is trading near the same levels, as that offered in its IPO earlier in March. In fact, it is trading slightly lower at Rs 217.

The one reason is because projects like these, take time to generate investor wealth and only patient investors end-up making money in such stocks.

Financials

For the quarter ending June 30, 2016, HCG reported a small net profit of Rs 5 lakhs, on sales of Rs 133 crores.

The net profits for the quarter ending March 30, 2016, was also flat at Rs 2.15 lakhs.

As we all know, projects like hospitals have long gestation period and ability to generate super profits takes time.

The fact that the company has already started making small profits is encouraging.

The benefits of a few hospital branches beginning to commence operations and the reduction of debt by the company through the IPO money, will help boost profits in the coming months.

Investment rationale

Healthcare stocks, particularly hospital chains, command a significant premium in the Indian markets.
Apollo Hospitals has a price to earnings ratio of almost 50 times.

These are considered as highly valued stocks. We believe that HCG would improve its earnings significantly in the years to come, as the business scales-up.

The potential for cancer care hospitals like HCG is tremendous. However, one needs to be patient and have at least a 5-year holding time frame.

Price can double

The shares have the potential to double in the next 5 years. Even if it doubles, you can make 20 per cent returns each year on an average rather easily in the next few years. Again, the returns are tax free in shares, sold at a profit after one year.
Buy this stock and hold from a long term perspective in mind.

Disclaimer

The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.