India’s corporate hospitals are set to gain on rapid growth in health care industry in India. Healthcare has become one of the largest sectors in terms of employment and revenue generation in India comprising hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.
According to an ASSOCHAM-RNCOS report, India’s health care market is expected to rise three fold to $372 bn in 2022 from $110 bn in 2016 at a compounded annual growth rate (CAGR) of 22%.
The factors supportive of growth are growing incidence of lifestyle diseases, more medical awareness, technological advancements and increasing investments by public and private sector.
Amidst the growth prospects of the health care industry, here is a look at the top corporate hospitals in India.
#Apollo Hospitals Enterprise Ltd (BSE: 508869, NSE: APOLLOHOSP) Category: Large Cap
Apollo Hospitals was set up in 1983 by Dr Prathap C Reddy and considered India’s first corporate hospital pioneering the private healthcare revolution. Apart from hospitals it has several ancillary services such as pharmacies, primary clinics, telemedicine units, insurance and allied services.
The Chennai hospital has received the #1 Top Super Speciality Hospital in India ranking and Apollo Indraprastha in Delhi in #2 position. A 480-bed hospital was launched in November 2016 in Mumbai which resulted in expansion of capacity by 30% or 2500 beds in recent years.
The hospital group reported a net profit of Rs 285.16 cr cr in 2016-17 and revenue Rs 6467.66 cr. In September quarter, net profit has fallen 22.93% to Rs 70.90 cr on annualised basis while sales has risen 13.31% to Rs 1851.64 cr.
Currently trading at a Price Earnings (PE) multiple of 71.45% and provided 6.2% quarterly returns although monthly and half-yearly returns are in the negative. It doesn’t score well on return on equity compared to peers at 6.03% and on assets at 2.87%. Net profit margin of 3.04% and liquidity, cash flow ratios also not quite attractive.
On technical charts, Relative Strength Index (RSI) of 50.14 denotes neutral to bullish trend while MACD line has witnessed a bearish crossover indicating sell strategy and ADX of 34 reflects uptrend. Charts display a head and shoulders pattern and next uptrend could take prices to 1200 levels in the short run.
Target: 1200 Duration: 3 weeks.
#Fortis Malar Hospitals Ltd (BSE:523696 ) Category: Small Cap
Fortis Malar Hospitals Ltd was established as Malar Hospitals in 1992 and is one among the distinguished super-speciality corporate hospitals in India offering comprehensive medical services. It was acquired by Fortis Heathcare in 2007.
The company is now headed by Daljit Singh, Chairman and is the driving force behind new programmes launched by the hospital. The Director Board has approved an amalgamation between Fortis Health Care Ltd and SRL Ltd. The company name would be changed to SRL Ltd and also to be listed in NSE. In 2016-17, the revenues grew 10% to Rs 140.56 cr from Rs 129.61 cr the previous year and net profit fell to Rs 3.11 cr as against Rs 6.42 cr in the previous year. In September quarter, profits rose 22% to Rs 1.25 cr while sales rose 1.57% to Rs 37.27 cr.
The scrip is trading at a PE of 56.3 indicating higher valuation by market. On a returns perspective, 17.23% monthly and 13.5% quarterly is above Nifty average with financial ratios not quite attractive-return on equity of 3.12%, assets of 2.38%, net profit margin of 2.21%,but good cash flow ratio and liquidity ratio add to the strength of the scrip.
On technical charts, RSI of 63.66 indicates bullishness, MACD has witnessed a bullish crossover indicating buy and ADX of 36 indicates uptrend. The chart displays a cup and handle pattern which is a bullish continuation pattern.
Target: 75 Duration: 4 weeks.
#Kovai Medical Center & Hospital Ltd (BSE: 523323) Category: Small Cap
Kovai Medical Center & Hospital Ltd was established in 1985 in Coimbatore with the intention of providing modern quality healthcare and it has won several awards and recognitions. The management team is led by Dr Nalla G Palaniswami, Managing Director and Dr Thavamani Devi Palaniswami, Joint MD.
In 2016-17, net profit rose to Rs 59,78 cr as against Rs 40.43 cr the previous year while revenue rose to Rs 533.45 cr from Rs 473.04 cr. In September quarter net profit rose 3.81% to Rs 17.65 cr while sales rose 13.27% to Rs 154.45 cr. Earnings per share has risen to Rs 16.13. It is trading at a PE of 11.34 indicative of moderate valuation by marketing.
On a returns perspective, 13.27% quarterly looks attractive while it fares well on return on equity at 25.59%, on assets at 12.94%, net profit margin of 11.39%, but fares poorly on liquidity, cash flow ratios.
#KMC Speciality Hospitals (India) Ltd (BSE:524520) Category: Small Cap
KMC Speciality Hospitals was incorporated in 1982 as Advanced Medical Care Pvt Ltd in Tiruchirapalli and was acquired by Sri Kaveri Medical Care (Trichy) Ltd and name was changed to KMC Speciality Hospitals (India) Ltd. The group companies are involved in a variety of medical services.
In September quarter, the company has reported a net profit of Rs 2.05 cr showing a growth of 38.69% while sales rose 36.65% to Rs 18.31 cr. On a returns perspective, 13.37% monthly, 30.2% quarterly and 10.86% half yearly is impressive while return on equity of 30.76%, on assets of 17.83% and net profit margin of 10.86% is attractive while liquidity, cash flow ratios fail to impress. It is trading at a PE of 62.69 which is indicative of higher valuation by market.
On technical charts, RSI of 54.92 is bullish, while MACD has witnessed a bearish cross over and aDX of 17.34 indicates range bound trading.
Target: 30 Duration : 2 weeks.
The health care industry is witnessing healthy growth thanks to increased disposable incomes, insurance coverage, health awareness among the population. However, the down turn in the economy and increased cost of drugs and consumers have impacted the performance of some hospitals in the last two years with average length of stay declining even as average revenue per occupied beds rose.
The growth in health care industry is attracting foreign direct investment in the sector. According to estimates, the sector has attracted US $4.34 bn between April 2000 and March 2017.