Healthcare Global Enterprises (NSE: HCG) is a medical services company engaged in providing super specialty services to patients in different parts of India and also provides clinical laboratory services focused on diagnosis of diseases core to HCG business. HCG was listed on NSE on 16 March 2016 after a decade of operation through various entities in India. It had issue price of Rs 218 and by 31Mar 2016 it traded at Rs 178.
The stock reached its peak two years after listing and traded at Rs304 by 15Mar 2018, thereafter declined with no improvement in its financial performance. Since 2017, HCG’s growth has dwindled from 16% to 6% in 2018, though the company has been able to keep its Operating Margin stagnant at 16% to 17% in past three years.
HCG’s lackluster performance is also reflected overall performance of medical services as nearest competitors of HCG have also faced profitability issues. HCG is still more profitable than Super Specialty Service providers such as Artemis and Apollo hospitals.
HCG has higher gross margin than its nearest competitors, Artemis has negative margins amongst all three players. Compared with Apollo, HCG has higher PBITM with 9.43% compared to 8.7% of Apollo. Though Apollo leads HCG in terms of return on Capital employed with 10. 6% while HCG has is almost half of its ROCE at 5.8%
Is it End of HCG’s decline?
HCG’s traded volume has been witnessing in past six months. The average traded volume has risen from 49K for six months to 66k for 3months and it since then it traded volumes have risen more than 2x to 140K.
But still HCG stock is trading below its 200days moving average price of Rs 134. HCG’s quarterly performance has also remained muted with revenues registering meager growth.