Thanks, @sujay85 for sending Prabhudas L report. Indeed it’s interesting to read, nothing to complain about.
Am just putting my thought process on brokerage reports or stock ideas by investor friends etc. for any company or sector.
- What’s the trigger/stories or narrative (same meaning)
- Is the trigger old or new?
- Will the trigger last long or short-lived?
- Is the trigger applicable to industries or specific to company?
As per PL report, the triggers are like
- Our GDP expenses are way below to global standard – that will increase and will benefit the sector.
- We are below the average of per patient bed / Dr & paramedical etc.
- Growing middle class will have discretionary spend etc.
All these triggers seem old. Had that been useful in past? Let’s see…
Listing history of hospitals are not new, if that won’t be a useful trigger in past, so won’t be useful for the future – can assume safely.
Let’s see past performance on hospital stock price:
5 yrs performance as per screener in CAGR
Apollo 31%
Fortis 8%
NH 15%
Aster DM 2% (3 yrs)
HCG 0%
Hence aggregate return is lower than the index. Hence we can safely conclude that the old narrative proved false for a stock price.
Now let’s come to company-specific triggers.
Am able to give examples of only HCG (as I have not studied others).
The main trigger for HCG is an entry of CVC – PE player. They decided to stop the new Capex for time being and concentrate on existing centres.
Is this trigger working?
Seems yes,
How?
They stopped the development of a new hospital in NCR even they need to incur losses. They diverse some stake of non-core business as well.
2nd, In Ahmedabad they are building a new hospital from the ground as the existing centre is developed haphazardly (Ref my earlier post in the same thread). Seems CVC is walking the talk.
Due to this trigger, I took some allocation.
Now on stock pricing, is this story working?
Seems yes, HCG is down 13% from 52 weeks High which is resilient, much lower dropdown vs other small caps.
Just sharing my thought process, open to feedback. Thanks.
Disc: Invested in HCG and views are biased. Not Sebi registered and not a recommendation.