Target: ₹621
CMP: ₹503.50
HealthCare Global’s (HCG) growth over the next 2-3 years is expected to be driven by a combination of organic expansion, brownfield projects, and acquisitions. The company plans to add approximately 900 beds, increasing operational capacity from 2,154 beds in Q3FY25 to 2,800 beds by FY27.
To maximise the potential of its existing centers, HCG is likely to expand in high-demand markets like Bengaluru. Additionally, the international patient segment, contributing 3.5-4 per cent of total revenue, has been impacted by geopolitical challenges, particularly in Bangladesh, but is expected to recover starting from Q4FY25.
HCG has experienced a temporary dip in EBITDA margins due to lower operating leverage. However, with KKR set to acquire a 54 per cent stake, we anticipate HCG will benefit from operational enhancements under new management. KKR’s proven expertise in healthcare investments will play a crucial role in this transition. Furthermore, as the company realigns its revenue streams, we expect EBITDA margins to improve significantly, rising from 17 per cent in FY25 to 21 per cent in FY27.
We expect Revenue and EBITDA to grow at a CAGR of 19 per cent and 28 per cent, respectively, from FY24-27, driven by revenue realignment (focus on high margin oncology treatments), operational expertise from KKR’s stake acquisition, and the rising importance of oncology in India’s healthcare market.