1. At a Glance
India’s largest cancer care network with 22+ centers and counting. Healthcare Global (HCG) is serious about oncology, but investors are wondering — with a P/E of 181 and return ratios flirting with mediocrity, is this life-saving business also wealth-creating?
2. Introduction with Hook
If cancer had a nemesis in India, it would wear a white coat with “HCG” stitched on it. Picture this: a ₹2,200 crore annual revenue, 222 beds added in FY25, and a razor-sharp focus on oncology and fertility. Now imagine all of that… with barely a 5% ROE.
- CAGR Sales (3 yrs): 17%
- Net Profit (FY25): ₹49 Cr (flat-lining?)
This is a business where saving lives is easier than saving balance sheets.
3. Business Model (WTF Do They Even Do?)
HCG is a specialty hospital chain with two core verticals:
- Cancer Care (90%+ Revenue): Operates 22+ hospitals under the “HCG” brand across India, with highly specialized oncology infrastructure.
- Fertility (Milann): A chain of fertility clinics, contributing <10% to revenue but >50% of marketing buzz.
They offer radiation, surgical, and medical oncology — with some of the country’s most advanced LINAC and PET-CT technologies. But unlike Max or Apollo, HCG is a niche player — no cardiac surgeries here.
4. Financials Overview
📊 FY25 Consolidated Financials (₹ Cr)
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 1,691 | 1,908 | 2,223 |
| EBITDA | 297 | 327 | 387 |
| EBITDA % | 17.6% | 17.1% | 17.4% |
| Net Profit | 18 | 41 | 49 |
| EPS (₹) | 2.11 | 3.46 | 3.19 |
Takeaway: Growth in sales, yes. Profits? Well, they kind of tagged along. Margin profile improving but interest costs remain a bloodsucker.
5. Valuation
- CMP: ₹577
- Book Value: ₹66 → P/BV = 8.7x
- P/E: 181x (because logic went for a checkup)
Fair Value Range:
- EV/EBITDA Median (Peers): ~25x
- HCG FY25 EBITDA: ₹387 Cr
- Target EV: ₹9,675 Cr → Equity Value ~ ₹8,000 Cr
- Fair Value Range: ₹475 – ₹525 per share
So… the open offer at ₹504.41 by Hector Asia Holdings? Almost too perfectly timed, no?
6. What’s Cooking – News, Triggers, Drama
- Open Offer Drama: Hector Asia Holdings wants to gobble up 26% at ₹504.41/share. Total outlay: ₹1,870 Cr.
- Capacity Additions: 222 beds added in FY25, particularly in Kolkata and Mumbai.
- Capex Mode: Over ₹400 Cr invested in the last 2 years alone.
- Diagnostic Expansion: Eyeing Tier 2 oncology markets — high margin, low competition, high patient churn.
7. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Net Worth | 860 | 825 | 922 |
| Total Debt | 901 | 1,274 | 1,837 |
| D/E Ratio | 1.04 | 1.54 | 1.99 |
| Fixed Assets | 1,553 | 1,758 | 2,442 |
Takeaway: A ₹1,837 Cr debt bill for ₹49 Cr profit. Either they’re building the next AI-powered cancer robot… or interest is eating into every other rupee.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Flow |
|---|---|---|---|---|
| FY23 | 252 | -133 | -140 | -22 |
| FY24 | 285 | -226 | -64 | -5 |
| FY25 | 317 | -488 | -42 | -213 |
Red Flag: Cash from ops is solid, but capex and expansion funding have pushed net cash flow into ICU.
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 2.11% | 3.46% | 3.19% |
| ROCE | 8.0% | 9.0% | 9.0% |
| Interest Coverage | 1.5x | 1.7x | 1.3x |
| OPM | 17.5% | 17.1% | 17.4% |
| Asset Turnover | 0.75x | 0.75x | 0.63x |
These are “meh” ratios for a company that charges lakhs per treatment. Low asset turnover indicates underutilization.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | Depreciation | Interest | Net Profit |
|---|---|---|---|---|---|
| FY23 | 1,691 | 297 | 163 | 104 | 18 |
| FY24 | 1,908 | 327 | 174 | 109 | 41 |
| FY25 | 2,223 | 387 | 211 | 155 | 49 |
Despite a ₹500 Cr jump in revenue over 3 years, profit only went from ₹18 Cr to ₹49 Cr. The operating leverage party hasn’t started yet.
11. Peer Comparison
| Company | Rev (₹ Cr) | Net Profit | ROCE | P/E | P/BV |
|---|---|---|---|---|---|
| Max Healthcare | 7,028 | 1,131 | 14.88% | 104x | 12.6x |
| Apollo | 21,794 | 1,445 | 17.1% | 72x | 12.8x |
| Fortis | 7,782 | 840 | 11.9% | 72x | 6.7x |
| Narayana | 5,483 | 796 | 20.6% | 50x | 11.0x |
| HCG | 2,223 | 49 | 8.5% | 181x | 8.7x |
Verdict: Most expensive stock for the least profit. Hope is the main ingredient in this valuation cocktail.
12. Miscellaneous – Shareholding, Promoters
- Promoters: 62.46% (recent fall due to open offer dilution)
- FIIs: Dropped from 7.3% to 2.16% in 2 years
- DIIs: Holding steady at ~13%
- Public Shareholding: Jumped to 22.16% — retail catching the falling stethoscope?
Also:
- No dividend. Ever.
- 45,000+ shareholders, most waiting for rerating since the Mughal era.
13. EduInvesting Verdict™
HCG is a national asset when it comes to oncology infrastructure — but as an investment, it’s currently in the “post-operative ICU” zone.
While the Hector open offer may provide a temporary floor, long-term rerating will need a dramatic uptick in profitability, not just capex.
Key Triggers to Watch:
- Can margins hit 20%+?
- Will capex translate into profits by FY27?
- And oh — will they ever declare a dividend?
Metadata
– Written by Prashant | July 19, 2025
– Tags: Healthcare, Hospitals, Oncology, Open Offer, Midcap, Capex Heavy, High P/E
