{"id":1002,"date":"2019-11-08T07:29:00","date_gmt":"2019-11-08T07:29:00","guid":{"rendered":"http:\/\/oscillationss.blogspot.com\/?p=1002"},"modified":"2019-11-08T07:29:00","modified_gmt":"2019-11-08T07:29:00","slug":"narayana-hrudayalaya-ltd-the-axis-mundi-of-stock-market","status":"publish","type":"post","link":"https:\/\/oscillations.in\/?p=1002","title":{"rendered":"Narayana Hrudayalaya Ltd: The Axis Mundi of Stock Market"},"content":{"rendered":"
\n<\/p>\n
\nNarayana Hrudayalaya:<\/span><\/u><\/b>
\n<\/span>This is one stock in which I have invested quite a big part of my
\nportfolio and advised everybody to invest big in this one. I am continuously advising this one at this blog- All the way from 250 in 2016 to 200 recently. Its stock price has increased quite a bit after that and now it is at 275. Healthcare is the
\nnext big thing going to happen in Indian economy. Healthcare is a stunning
\noption for Indian economy and this is where we have unmatchable technical
\nexpertise and we can create an affordable global hub for healthcare services to
\npromote medical tourism. We already are one of the biggest and highest growing
\nmedical tourism but we can create a real giant much bigger than IT industry.
\nUnlike other industries, healthcare sector create more jobs as the role of
\nmachines are comparatively less.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nAnd when it comes to affordable
\nhealthcare then NH is the undisputed leader\u2026in fact no comparison at all. Apart
\nfrom medical tourism local demand is going to be strong due to rising income
\nlevels and life expectancy, health insurance penetration and Government health
\nschemes.<\/span>
\n
<\/span>
\nHealthcare sector is going to see the big disruption in the near future and NH is going to be the major disruptor. Due to high pricing healthcare is still unaffordable to the masses. Across the globe, still 90% people can’t afford heart surgeries and are dying a death which can be and should be avoided. Healthcare industry due to its own inefficiencies has created a situation where people believe that healthcare indeed is a premium high price thing. But then NH happened and they have brought the assembly line disruption in healthcare and proved to the world that even at much lower prices healthcare business can be profitable. That’s why i feel healthcare sector has HUGE scope of scale and NH has everything to capture a big chunk of this opportunity. <\/span>
\n
<\/span>
\nIn fact i want our government to take this industry very seriously as this has the capability to do something big for our economy even bigger than IT industry and can be a large foreign exchange earner. I even want our Government to support (financing) the likes of NH to open hospitals across the globe in order to earn precious foreign exchange…our government needs to recognize the points of strength in Indian economy and then doing all it can do to support and grow those. Nothing at present is better than healthcare in fact if you ask me then i can say our technical skills in healthcare are much better than Pharma and IT industry. Our doctors are easily one of the best across the world in their skills and we need to learn to harness this skill of ours.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nWe started picking NH around 260
\n2-3 years back and when it touched 350 during peak market in 2017 I was thinking
\nthat I would have no other option but to invest more in this at 400-500 levels.
\nBut then market fell and NH started falling also and recently it touched 180
\nlevels and I grabbed the opportunity to invest as much as I can at these
\nlevels. Now my average is some 230-240. NH has already given stunning
\nimprovement in its results in last 2 quarters. The improvement although was inevitable
\nbecause as the maturity profile of its hospitals increases they generate more
\nprofits.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nActually in Healthcare
\nthere is high operating leverage as most of the expenses are fixed so when a
\nhospital is new, revenue will be lower but fixed charges like depreciation\/lease
\nrentals of building, machinery, staff payments hit hard. Healthcare uses very
\nexpensive medical equipment so upfront fixed expenses are high so this gives a
\nfalse impression of losses. But as most charges are fixed so most of the
\nincremental revenue goes to bottom line and this is precisely what has happened
\nwith NH as its topline is growing some 15-20% but bottom line is growing 400-500%
\nfor last 2 quarters. Even for this quarter results I expect around 200% growth.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nJust to offer a perspective on the
\nimpact of operating leverage- if we compare the last 2 quarters results with
\ncorresponding period of last year (Mar-18\/jun-18 vs Mar19\/jun19) then the following
\npicture emerges:<\/span><\/div>\n
\n
<\/span><\/div>\n\n\n\n\n\n\n\n
\n
\nFig in
\n Cr.<\/span><\/b><\/div>\n<\/td>\n
\n
\n<\/div>\n<\/td>\n
\n
\n<\/div>\n<\/td>\n
\n
\n<\/div>\n<\/td>\n<\/tr>\n
\n
\nDescription<\/span><\/b><\/div>\n<\/td>\n
\n
\nMar-18\/Jun-18<\/span><\/b><\/div>\n<\/td>\n
\n
\nMar-19\/Jun-19<\/span><\/b><\/div>\n<\/td>\n
\n
\nGrowth %<\/span><\/b><\/div>\n<\/td>\n<\/tr>\n
\n
\nTurnover<\/span><\/div>\n<\/td>\n
\n
\n1300<\/span><\/div>\n<\/td>\n
\n
\n1542<\/span><\/div>\n<\/td>\n
\n
\n18.62%<\/span><\/b><\/div>\n<\/td>\n<\/tr>\n
\n
\nEBITDA<\/span><\/div>\n<\/td>\n
\n
\n67<\/span><\/div>\n<\/td>\n
\n
\n191<\/span><\/div>\n<\/td>\n
\n
\n185.07%<\/span><\/b><\/div>\n<\/td>\n<\/tr>\n
\n
\nNP<\/span><\/div>\n<\/td>\n
\n
\n6<\/span><\/div>\n<\/td>\n
\n
\n67<\/span><\/div>\n<\/td>\n
\n
\n1016.67%<\/span><\/b><\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n<\/div>\n
\nSo as we can see fortopline growth
\nof 19% the corresponding growth in EBITDA and NP is staggering 185% and 1000%.
\nThis shows the massive re-rating potential of NH. Due to the mix of mature and
\nnew hospitals which impacts the bottom line individualy in opposite direction
\nit is not propoer to value it on the basis of conventional PE ratio. Here
\nEBITDA will give some insights. If we take the recent deals of Fortis and Max
\nHealthcare at around 25 times EBITDA levels as benchmark then at EBITDA (last
\n12 months) of 340 cr then this value the NH at some 8500 cr. But both Fortis
\nand Max Healthcare has much higher proportion of mature hospitals while NH is
\nquite a young fellow. So its young age, <\/span>precision
\nlevel capabilities and low cost model <\/span>are sufficient to value this one much higher-
\nat 30 times EBITDA which makes this one valued at 9000-10000 cr (after deducting debt around 700 cr)<\/span>. Its current market
\ncap is just 5600 cr. Also, we should keep in mind that its EBITDA is growing
\nvery fast and it will not be a surprise if we see an EBITDA of 450 cr for this
\nyear. So this will make 10000 cr as some 20 times of EBITDA which is quite well
\nwithin the reach.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nHCCI-the jewel in
\nthe crown<\/span><\/u><\/b><\/div>\n
\n
<\/span><\/u><\/b><\/div>\n
\nFurther, it has
\nestablished one of the best hospitals in Cayman Island near USA named HCCI. Earlier
\nNH was having 29% stake in it but now they have acquired 100% stake in it. This
\nis a novel experiment by NH to capture the US\/Canada and Caribbean markets with
\nits low cost model. It has received great response and accolades for top notch
\nquality care at affordable rates. <\/span><\/div>\n
\n
<\/span><\/div>\n
\nHCCI\u2019s pricing is not as low as the
\npricing NH charges in India, but services are typically one-half to one-quarter
\nlower than in the US. For example, a Coronary Artery Bypass Graft (CABG) is
\ncurrently priced at about $32,000, compared to a 2015 US average of $151,785.
\nHepatitis-C treatments under commercial coverage in the US currently average
\n$75,000 vs. $19,000 at HCCI. The average 2016 US price for hip replacement is
\n$39,299, while HCCI offers bundled pricing of $15,800. Dr. Shetty has set an
\nambitious goal of reducing all these prices further by 50% in five years. HCCI\u2019s
\ninitial 104 bed facility cost $46 million or about $442,000 per bed, compares
\nto more than $1.5 million per bed currently in the US.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nHCCI is already getting significant
\ntraffic from the Caribbean, Central and Latin America and Canada and traffic is
\nnow growing from the US as well. It has shocked USA
\nhealthcare industry with this kind of affordable pricing and many USA
\nhealthcare analysts\/players are lauding NH for this initiative. <\/span>HCCI is
\ngoing to touch some 400-500 cr revenues this year and it has very high
\noperating margins of 27-30%. But most important thing
\nis that the success of this initiative will create the blue print for more such
\nventures and nobody from India has the caliber to take this type of innovation
\nand risk but this is something which has the potential to transform global
\nhealthcare industry and Indian economy.<\/span><\/span><\/div>\n
\n
<\/span><\/span><\/div>\n
\nEarlier, American
\nhealthcare industry never considered affordable indian healthcare as a threat
\nbecause nobody will travel to India from USA with all sorts of negativity about
\nIndian hygiene and poverty. But what Dr. Devi Shetty has done has literally shaken
\nthe Americans to the core and they are considering NH as a very serious threat.
\n<\/span>US people are expecting that HCCI will force American healthcare industry
\nto reduce its high prices.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nNH-The Axis Mundi<\/span><\/u><\/b><\/div>\n
\n
<\/span><\/u><\/b><\/div>\n
\nNH is a disruption never seen
\nbefore and at present I don\u2019t think that analysts\u2019 fraternity has the requisite
\nexpertise to measure its margins and topline growth in the future. I adore this
\nman Dr. Devi Shetty and feel there is nobody in India (may be Globe) who can
\nmatch with him in terms of capability, eye for details, aggression, integrity, passion
\nand most importantly humanity. He has never returned any poor patient for money
\nand there are many stories where poor people adore him like God placing his
\npicture amid other Indian deities. Sometimes back, I thought of writing a detailed
\npost on the strategy and future of NH and Dr.Devi Shetty\u2026I went on writing and writing
\nand so far it has covered some 14-15 pages and I am still not satisfied and I wonder
\nwhether I\u2019ll ever be\u2026because I am in awe of this man Dr. Devi Shetty. For this
\narticle I have just used some parts of that article. But I will submit the full
\nstudy very soon\u2026I need to stop at some point in order to enjoy the
\nsurroundings. <\/span><\/div>\n
\n
<\/span><\/div>\n
\nToday is the result day
\nfor NH and I am counting on hefty growth in topline and bottom line. So it is a
\ngreat fit for every portfolio and a great buy below 300. CMP is 275.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nNH has brought down the prices of
\nheart surgeries to such a low that the same looks like a charity. <\/span>It offers heart surgeries at $1000 compared
\nto $40000-100000 by western counterparts!!! It is offering these even at 1\/3rd
\nof prices in normal Indian hospitals. And these prices have left the globe in
\nawe but even at these prices NH is earning profits. NH has taken the price of
\nheart care to 1990\u2019s levels. Also earlier avatar of NH was more of a
\nphilanthropic one where it didn\u2019t care much for the returns. But after IPO NH
\nis focusing on profits also and in order to maintain the affordability it is
\nreconstructing its business completely.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nNH is just like the
\ngreat Kailash parbat- the only un-climbed summit of the world (However as per Tibetan
\nlegends, Milarepa the great Tibetan Mystic has climbed the summit in 12th century…and none after him).
\nIt is full of mysteries which are just a sign that it is the summit of
\nspirituality and a place just best suited for Gods to rest and watch us.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nSome mystics regard
\nMount kailash as Axis Mundi…means a place where Earth meets the Divine. They
\nsay it is the door way to the world of Gods…the Sachkhand…the Shambhala.<\/span><\/div>\n
\n
<\/span><\/div>\n
\nNH is the Axis-Mundi of
\nthe stock market where charity and compassion meets business and you can’t
\ndecide whether it is business or charity. And the high PE ratio it deserves is only for
\nthe Reverence.<\/span><\/div>\n
\n
<\/span><\/div>\n
\n(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing. I am not a certified Sebi Analyst and holding the shares discussed in this Post. Reach me at oscillationss@yahoo.in<\/span><\/span>).<\/span><\/div>\n
\n<\/div>\n

<\/div>\n","protected":false},"excerpt":{"rendered":"

Narayana Hrudayalaya: This is one stock in which I have invested quite a big part of my portfolio and advised everybody to invest big in this one. I am continuously advising this one at this blog- All the way from 250 in 2016 to 200 recently. Its stock price has increased quite a bit after that and now it is at 275. Healthcare is the next big thing going to happen in Indian economy. Healthcare is a stunning option for Indian economy and this is where we have unmatchable technical expertise and we can create an affordable global hub for…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1002","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1002"}],"version-history":[{"count":0,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1002\/revisions"}],"wp:attachment":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}