Hot Chips - Raymond & Apollo Hospitals
11/21/2011 12:56 PM Monday
RAYMOND (BSE Code: 500330)
After a VRS settlement with its employees, Raymond now has 120 acres of land (previously the location of its Thane plant) in the heart of Thane city available for development. The company is exploring options to monetize this land either through an outright sale or joint development. Any development with regard to land bank monetisation would provide additional trigger for the stock. Raymond is present in the fast growing discretionary and lifestyle category of branded textiles and apparels.
With strong brands like Raymond, Park Avenue, Parx and ColorPlus in its portfolio it is well-placed to cash in on the discretionary consumption opportunity offered by the favourable demographic and income profile of the Indian consumer. Branded apparels and fabrics present a tremendous growth opportunity going forward. We believe that one can look at the stock from a medium to long term perspective.
APOLLO HOSPITALS (BSE Code: 508869)
Apollo Hospitals has the largest network of hospitals (5842 owned and 2875 managed beds of which 4986 are operational). Given the scale with a large proportion of mature hospitals, the company is well-positioned to grow profitably going forward. It has mainly followed an organic route to date and has consistently grown ahead of the industry growth rate. The hospital business constitutes around 73% of the revenue and around 99% of the operating profit.
A strong foothold in south India with mature hospitals remains the key driver in the medium term along with the fact that the company is a cash cow that will aid in its planned expansions. It has plans to add 2400 beds by FY14 with an additional capex of Rs 850 cr. It also has a presence in pharmacy stores, health insurance and a healthcare BPO. A maturing store-mix of pharmacy operation and incremental focus on profitability is likely to be accretive to the overall operating profit. We believe that one can look at the stock from a medium to long-term perspective.
Disclaimer: The scrips in this column have been recommended with a short-term investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
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