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In Q3FY24, HCG's performance was in below our expectations on all front. The revenue for the quarter showed growth of 10.6% YoY however down by 3.5% QoQ, reaching Rs. 4.69bn. The EBIDTA for the quarter grew by 4.1% YoY and down by 7.1% QoQ to Rs. 786mn. The margin for the quarter contracted by 105bps YoY and 65bps QoQ to arrive at 16.7%. Adj. PAT for the quarter showed a significant growth of 35.7% YoY and down by 58% QoQ, reaching Rs.57mn. The overall Average Occupancy Rate (AOR) declined to 59.8% vs. 65.7% in Q3FY23

? Hospital Expansion Plans: To strengthen market presence, the company has unveiled plans for a new 100-bed hospital, a comprehensive cancer care center in the vibrant North Bangalore market, slated to become operational within 15 to 18 months. Progress in recent acquisitions in Nagpur and Indore aligns with the strategic plan. During the quarter, 59 beds were added across network hospitals. The company is progressing as scheduled to increase beds in its Ahmedabad facility by 100, reaching a total of 200 beds. In KR Bangalore, a center of excellence, 20+ beds were added, achieving occupancies around 65-70%, with ample room for further growth in all modalities. Looking ahead, the company plans to add about 350 beds over the next three years, encompassing projects in Ahmedabad and Whitefield.

? Revolutionizing Cancer Care: Entering 2024, the commitment to excellence in cancer care remains a high priority. The focus is on the goal of making quality cancer care accessible to all. The company has launched a first-of-its-kind app – HCG Care, specifically designed to serve the needs of cancer patients. It serves as a one-stop solution for patients to navigate seamlessly from MDT consultations to second opinions, diagnostics, pharmacy needs, rehab services, and home care support, along with post-discharge follow-ups, ensuring a smooth and personalized journey

? Revenue Boosts and Operational Milestones: The introduction of four operational radiation machines in the first half has led to a 13% growth in the radiation business, improving the revenue mix. Strategic investments in clinical talent and business promotion have shown promising results, with Kolkata and Mumbai delivering 57% and 17% growth, respectively. Notably, additional losses at the Kolkata center have halved quarter-on-quarter. Other centers, including Nagpur and Ranchi, have displayed impressive growth rates of 59% and 31%

Outlook and Valuation: Anticipating robust growth, we project a 15.3% CAGR in revenue and an 18.9% CAGR in EBIDTA for FY23-26E. HCG's strong brand, comprehensive oncology services, and expansion plans drive this outlook. However, near-term profitability might be impacted by ongoing initiatives, including acquisitions and talent additions. We maintain a Neutral rating on the stock with a target price of Rs. 384 (based on 11.7x FY26E EV/EBIDTA).

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