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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Email: services@yellowstoneequity.com
Mobile: +91-7575817289

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 reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.</li>
<li>Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.</li>
<li>We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  </li>
</ul>


HCG reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.
Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.
We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  


HCG: Executing Well With Prudent Expansion

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>The oncology industry is projected to grow at 13-14% CAGR over FY24-30E, primarily due to insufficient early-stage diagnoses in India.</li><li>It is anticipated that Healthcare Global Enterprises (HCG) could surpass this industry growth by 200-300bps.</li><li>Over the next three years, HCG's Average Revenue Per Occupied Bed (ARPOB) is expected to grow at 5% CAGR, while occupancies may experience an improvement of 300bps within the same timeframe.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

The oncology industry is projected to grow at 13-14% CAGR over FY24-30E, primarily due to insufficient early-stage diagnoses in India.It is anticipated that Healthcare Global Enterprises (HCG) could surpass this industry growth by 200-300bps.Over the next three years, HCG's Average Revenue Per Occupied Bed (ARPOB) is expected to grow at 5% CAGR, while occupancies may experience an improvement of 300bps within the same timeframe.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Healthcare Global Enterprises Ltd - Improving ARPOB Led By Operational Efficiency

<ul>
<li>With emerging centers scaling up and established centers growing steadily, HCG's profitability is growing strong. HCG's Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. </li>
<li>With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.</li>
<li>We estimate that by FY26, HCG's PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.</li>
</ul>


With emerging centers scaling up and established centers growing steadily, HCG's profitability is growing strong. HCG's Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. 
With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.
We estimate that by FY26, HCG's PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.


HCG: Emerging Centers Are Scaling Up Well

<ul>
<li>Despite Q3 being seasonally weak, <a href="https://www.smartkarma.com/entities/healthcare-global-enterprises-limited" target="_blank" data-smartkarma-citation="entities:23983:1" rel="noopener">HealthCare Global Enterprises ("HCG")</a> reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.</li>
<li>HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.</li>
<li>With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.</li>
</ul>


Despite Q3 being seasonally weak, HealthCare Global Enterprises ("HCG") reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.
HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.
With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.


HCG: FY25 and FY26 Set To Be Defining Years

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Eisai Announced that global revenue of Leqembi in Q2FY25 was ¥10B, up 1.6x than Q1FY25. Takeda Pharma announced positive interim results from a Phase 3 study.</li>
<li>Shionogi’s COVID-19 drug was effective in reducing transmission of the disease. JCR Pharmaceuticals initiated first patient dosing in Japan in the Phase I clinical trial of JR-441.</li>
<li>Celltrion signed a contract with a U.S. GPO to list Zymfentra on private insurance formularies, which will expand the drug's coverage to 90%+ of the U.S. health insurance market.</li>
</ul>


Eisai Announced that global revenue of Leqembi in Q2FY25 was ¥10B, up 1.6x than Q1FY25. Takeda Pharma announced positive interim results from a Phase 3 study.
Shionogi’s COVID-19 drug was effective in reducing transmission of the disease. JCR Pharmaceuticals initiated first patient dosing in Japan in the Phase I clinical trial of JR-441.
Celltrion signed a contract with a U.S. GPO to list Zymfentra on private insurance formularies, which will expand the drug's coverage to 90%+ of the U.S. health insurance market.


APAC Healthcare Weekly (Nov 3)- Eisai, Takeda, Shionogi, Astellas Pharma, Celltrion, Wuxi AppTec

India

HealthCare Global Enterprises Limited provides medical and surgical hospital services. The Hospital offers cancer care, chemotherapy, cyberknife surgery, surgical, radiation, and medical oncology services. HealthCare Global Enterprises operates worldwide.

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HealthCare Global Enterprises (HCG IN)

HCG: Executing Well With Prudent Expansion

HCG continues to execute well with scaling up of its emerging centers, brownfield expansion of its core centers and prudent inorganic acquisitions....

Ankit Agrawal, CFA

Healthcare Global Enterprises Ltd - Improving ARPOB Led By Operational Efficiency

The oncology industry is projected to grow at 13-14% CAGR over FY24-30E, primarily due to insufficient early-stage diagnoses in India.

Axis Direct

HCG: Emerging Centers Are Scaling Up Well

Led by scale up and operating leverage, HCG's profitability is growing strong. At the current valuation, an investment in HCG has potential to...

Ankit Agrawal, CFA

HCG: FY25 and FY26 Set To Be Defining Years

HCG is scaling up well, led by robust demand and its dominant cancer care positioning. At the current valuation, an investment in HCG has potential...

Ankit Agrawal, CFA

APAC Healthcare Weekly (Nov 3)- Eisai, Takeda, Shionogi, Astellas Pharma, Celltrion, Wuxi AppTec

Large APAC healthcare companies are reporting mixed earnings. Demography will play a key role in ensuring how the overall domestic demand scenario...

Tina Banerjee

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