MUMBAI - Healthcare Global Enterprises Ltd (HCG), a leading healthcare provider, has reported a significant increase in its second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA), with a 13% year-over-year rise to Rs. 846 million. This growth has been attributed to the strong performance of both existing and newly established centers. The company's existing centers saw an 8% increase in revenue to Rs. 832 million, while new centers experienced a remarkable 21% jump to Rs. 122 million.
The company's financial health is further evidenced by the robust revenue growth across its units, with Mumbai seeing a 41% increase, Kolkata 42%, and Nagpur an impressive 60%. The Nagpur unit alone posted an EBITDA of Rs. 21 million and is expected to maintain a trajectory of high growth in the coming quarters.
HCG's forward-looking statements are equally positive, with margin projections anticipated to reach around 20% by the fourth quarter of FY24 or the first quarter of FY25. This optimistic outlook is supported by strategic expansions, including the acquisition of a 50-bed hospital in Indore which currently generates Rs. 300 million annually. HCG plans to expand this facility by an additional 50 beds, requiring a capital expenditure of Rs. 400-500 million and expected to be operational within two years.
In line with its expansion strategy, HCG has also launched new women's cancer wings in its South Mumbai centers and operationalized three Linear Accelerator (LINAC) machines as part of its commitment to add six LINAC machines over the next 18 months. Currently, the utilization rate for these machines stands at 61%. Additionally, HCG has introduced its first robotic program in Borivali and installed robotic radiation surgery machines in Baroda, Mumbai, and Kolkata.
Param Desai has recommended a 'Buy' for HCG shares with a target price of Rs. 420 per share. The company's revenue rose by 16% year-over-year to Rs. 4.9 billion due to strong average revenue per occupied bed (ARPOB) growth of 14% year-over-year and 6% quarter-over-quarter. However, the occupancy rate declined slightly to 63.6%. Despite this, HCG's net debt increased quarter-over-quarter by Rs. 935 million to Rs. 3.1 billion, while maintaining an annual lease cost that represents approximately 4% of revenues.
The company's strategic initiatives have also led to the growth of Milann centers' revenue by 7% year-over-year and have benefited from the absence of one-time corporate costs, contributing to improved margins. As HCG continues to expand its services and facilities across India, investors and stakeholders are closely watching its progress towards achieving higher profitability and market share in the healthcare sector.
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