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  • Stock recommendation: HealthCare Global — Reduce — Target price Rs 290

    Publish date: August 13, 2018


    Results update: Weakness in fertility business drives miss

    HealthCare Global (HCG) was off the mark in the earnings department owing to a lackluster fertility business. The cancer care providers also saw its net debt levels increase as it continues to expand the fertility business through its Milann brand.


    Key highlights

    • HCG’s EBITDA and revenue growth were impacted by a 5% revenue slump in its Milann business (fertility business). While the EBITDA of Rs 306 million missed our estimate by 7%, the revenue growth was 2% below our estimate.
    • The Milann suffered a setback due to non-availability of a key doctor in their Bengaluru centre.
    • Its oncology business did well by growing at 21% (YoY), while mature centers grew 12% (YoY).
    • Even as net debt has increased to Rs 5 billion in quarter ended June, HCG has sounded out plans to expand its presence in Jaipur (50 beds), Kolkata (50 beds) and Mumbai (32 beds).

    Valuation & outlook

    We reckon the fertility and oncology businesses have built a good base for the future, but the aggressive expansion plans has given HCG very little wriggle room due to high debt levels.


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