Buy This Multibagger Small-Cap Hospital Stock For Rs 337 Target Price: Geojit

Geojit, a leading brokerage firm, in its recent report has recommended buy the stock of Healthcare Global Enterprises Ltd. (HCG) for a target price of Rs 337 apiece. According to the brokerage's estimated target price, if the stock of the company is bought at the current market price, it could fetch a potential gain of up to 28% in 12 months. Healthcare Global Enterprises Ltd. is a small cap Telecom Sector Miniratna company having a market capitalization of Rs 3,665.16 crore.

HCG Cancer Hospital is one of the best cancer hospitals in India. It has a chain of 24 comprehensive cancer centres, which offer cutting-edge diagnostics and world-class cancer treatments across the nation. HCG Cancer Centre uses leading-edge technology, has knowledgeable and experienced professionals at its disposal, and its distinctive cancer treatment procedures contribute to providing our patients with timely diagnostic and clinical care assistance.

Stock Outlook

The current market price of Healthcare Global Enterprises Ltd.'s stock is Rs 263.65 apiece on NSE. The 52-week low of the stock is Rs 214.90 apiece and the 52-week high is Rs 308.80 apiece, respectively.

Returns on investments

The stock in the past 1 week has given 2.19% negative return, whereas, in the past 1 month it gave 7.57% negative return. Over the past 1 year, the stock surged 9.44%, giving a positive return. In the past 3 years, it has given a multibagger return of 121.28%. however, in the past 5 years, it gave a negative return of 2.24%.

Healthy growth across all regions

HCG reported robust performance with consolidated revenue growing by 26% YoY with secular growth across regions and segments. Strong growth in revenues continues across centers in the previous quarter with Jaipur clocking 263% YoY growth followed by Ranchi with 112% YoY growth. The company introduced centralized call center and customer management system to increase efficiencies and customer satisfaction. The high revenue was largely domestic led. 88% of this revenue was oncology centric. Non-oncology revenue registered a 2.2x growth on a quarterly run rate over FY21-FY23. EBITDA continued its growth trajectory to Rs. 72cr (41% YoY growth) , improving 180bps in Q1FY23. Average Revenue Per Operating Bed (ARPOB) grew 5.9% YoY to Rs.38,454 owing to rising high-end works while total occupancy rate grew by 680bps to 64.6%.

Good growth prospects in Milann across all metrics

Milan Fertility Centre demonstrated good recovery across all metrics, with 43% YoY growth in revenue to Rs.17.3cr. New registrations grew 138.5%, due to improved digital traction as a result of continued effort on digital campaigns. Additionally, Milann plans on implementing continuous focus on strengthening clinical talent. The company intends to consolidate and focus on market leadership in Bangalore and scaling-up North India centers in the near term.

CAPEX plans in focus

HCG's capex for Q1FY23 was Rs.16.3 cr, allocated between new and existing centers at Rs.4.1 cr and Rs.12.2 cr respectively. Total planned CAPEX for Ahmedabad is Rs.85 cr (Rs.7 cr incurred), with the expected date of operations being Q1FY25, while brownfield expansion in Bangalore is for Rs.25 cr (Rs.1 cr incurred), which is expected to be operational by Q4FY24. The company plans a few inorganic acquisitions as a part of their growth strategy and is actively pursing them currently.

Outlook and valuation

According to the brokerage, "Given HCG's focus on oncology, increasing new registrations, negligible debt and growth potential in international patients, the company looks poised for a consistent growth trajectory. Strategic initiatives across business development and digital health will act as key catalyst in driving strong momentum in the future. Hence, we upgrade our rating to "Buy" based on 13x FY24E EV/EBITDA with a target price of Rs. 337."

Disclaimer

The stock has been picked from the brokerage report of Geojit. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.