Recommendation from Hospitals & Medical Services Sector
This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
INDRAPRASTHA MEDICAL CORPORATION LTD : IN AN ABSOLUTELY ROBUST STATE
HERE IS WHY
✓Good financial improvement
✓Good growth prospects
✓Good expansion strategy
Indraprastha Medical Corporation (IMC) is a Delhi–based healthcare company which operates through Indraprastha Apollo Hospital. Indraprastha Apollo, a 695-bed specialty hospital, was commissioned on December 1995 in collaboration with New Delhi administration. The hospital, spread across an area of 675,000 sq. feet, is the largest corporate hospital in India and the fourth-largest in the world. The hospital has various centres such as Apollo Cardiac Centre, Apollo Cancer Centre and Apollo Surgical Science Centre, among others. The company has operated on around 7.4 million patients. The group also owns 12 hospitals and four clinics. It is running a multi super– specialty hospital.
The financial performance of the company has improved in the financial year 2019-20. The company reported net sales of Rs 830.77 crore in FY20, an increase of 5.4 per cent. It had reported net sales of Rs 788.17 crore in FY19. The company reported PBIDT of Rs 86.39 crore in FY20, an increase of 6.95 per cent. It had reported PBIDT of Rs 80.78 crore in FY19. The company reported PAT of Rs 43.62 crore in FY20, an increase of 53.54 per cent. It had reported PAT of Rs 28.41 crore in FY19. The company has reported cash from operating activities of Rs 86.45 crore in FY20 as against Rs 75.19 crore it reported in FY19.
Its net sales were at Rs 180.01 crore in December 2020, down by 14.45 per cent from Rs 210.43 crore in December 2019. PBIDT stands at Rs 25.96 crore in December 2020, up by 9.83 per cent from Rs 23.64 crore in December 2019. The quarterly net profit was at Rs 11.99 crore in December 2020 as against net profit of Rs 10.68 crore in December 2019, an increase of 12.24 per cent. The company has shown good profit growth of 18.46 per cent for the past three years. The company has a high promoter holding of 51 per cent.
The major strengths of the company are a rich repository of experience, widespread network, broad spectrum of technological experience, comprehensive offerings and high brand salience. The company can gain from opportunities like medical tourism, enhanced access and lower cost of delivery through digital solutions, changing demographics, changing formats and consumer preferences, preventive health and wellness and underserved and poorly-served markets. Indraprastha Medical Corporation plans to set up more than 10 satellite clinics in and around Delhi to facilitate easy availability of Apollo-type medical services to a larger cross-section of society.
These clinics are to take the shape of mini-hospitals with all basic back-up emergency services mainly aimed at providing post-treatment facilities to Apollo Hospital’s patients. Each clinic would cost between Rs 10-15 million. It also plans to acquire some of the existing small clinics situated at various locations, upgrade them and start as Apollo clinics. The company is debt-free. Healthcare organisations usually have high debt loads and low equity capital in their balance-sheet. So, debt to equity ratio is important to analyze the company’s sustainability. Indraprastha Medical Corporation is debt-free, which is a strong indication for the company. On the returns front, it has ROE and ROCE of 17.05 per cent and 20.15 per cent respectively. The stock is trading at an adjusted PE multiple of 7.13x, which is well below its industry average PE. By virtue of these factors, we recommend our reader-investors to BUY this stock.
