Every worker in the world want to become rich! No doubt about it. However, the road to riches is not smooth. In fact, many just end up far short of that. Needless to say, experts’ tips can make the journey easier and surer too. In the endeavour to make the lives of investors easier, HDFC Securities has picked a top healthcare share to buy. Notably, it is expected to gain a whopping 36 per cent in just 12 months.
So, at a time when the global share market is severely hit by the Coronavirus, even good quality shares are unable to hold their ground. It has even led US Federal Reserve to cut interest rates by 0.5 per cent to handle the hit on its economy caused by the spread of COVID 19.
Indian indices are also not insulated by this Chinese epidemic and the Nifty has gone down by near 10 per cent in the last fortnight. According to the stock market experts, it will take time for the global markets to come out of the Coronavirus impact. However, they also maintain that in such a scenario, those stocks which were considered strong from both fundamental and technical perspective, are giving a good chance to the portfolio investors to encash whopping returns when the Coronavirus impact becomes a thing of the past.
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Narayana Hrudayalaya — a healthcare stock — is one such share to buy, say experts. In fact, Narayana Hrudayalaya share price is the pick of the week by HDFC securities. In a detailed research report, HDFC Securities has said that Narayana Hrudayalaya is promoted by renowned cardiac surgeon Dr. Devi Prasad Shetty. NH operates a chain of 21 hospitals, 6 heart centers and 19 primary care facilities in India and 1 hospital in the Cayman Islands. As on Dec-19, NH has around 5,770 operational beds and a capacity of up to 6,579 beds. It derives around 46 per cent revenues from Bengaluru and South Cluster. Eastern cluster revenues contribution stood at 34%. Western and Northern cluster revenues contribution stood at 14 per cent and 6 per cent respectively.
Elaborating upon the fundamentals of the Narayana Hrudayalaya shares the HDFC Securities report says, “The new hospitals (SRCC – South Mumbai, Gurugram, Dharamshila) continue to see a reduction in losses as these assets have seen a healthy ramp-up in utilisation. These hospitals will turn EBITDA breakeven mostly by the end of FY21. Consistent improvement in occupancy across all segments coupled with seasonality impact propelled revenue growth and margins in 9M FY20,” adding, “We see significant improvement in margins and RoCE as the four hospitals in the Bleed phase move into the Ramp Up phase. Also, there are no new hospitals that are likely to be commissioned in the medium term. Narayana Hrudayalaya had initially around 29 per cent stake in the HCCI hospital and then bought back the rest of the 71.4 per cent stake in 2017. HCCI primarily targets North American patients and provides high-quality, affordable health care. In 9M FY20, HCCI reported revenues of $47mn with EBITDA of $11mn (23.5 per cent margin).”
Suggesting stock market investors to buy Narayana Hrudayalaya shares the HDFC Securities report said, “We recommend Buy on Narayana Hrudayalaya at current market price (Rs 320.80) and add on dips to Rs 305 with Sequential targets of Rs 378 and Rs 435 over the next 4 quarters. Based upon 15.3x FY22E EV/EBITDA, we arrive to TP of Rs 435.”
However, the research report also gives a red flag when the stock reaches around Rs 272. So, stock market investors are advised to maintain the stop loss at Rs 272 while taking buy position in the Narayana Hrudayalaya shares.