ValuePickr Carolina (USA)

Hi Amit,

Have you given Healthcare Global Enterprises a shot?. How different is its business model compared to Narayana’s?. Healthcare Global has got too much debt, now sure if it is reasonable or stretched. Just wanted to know your thoughts, if any.

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Hi @vb_1lavya,

Narayana’s business model is very different from HGE’s. Narayana gets structured deals from governments and private parties for most new hospitals where the capital outlay is not as big as other hospital groups. You might want to to dig into the way deals were structured for their hospitals in Jammu, Cayman Island, and the one they are going to open in Bangladesh. It is very interesting. I think this is their biggest advantage. Plus they do tiered pricing which is very unique. I am very impressed by Mr. Viren Shetty’s astute business acumen. He has amazing grip on the business intricacies and keeps interests of all stakeholders in mind while taking any critical business decisions, which I feel is lacking with other players. But Apollo Hospitals is also run well, in my view.

With hopsital business, one needs to understand if one wants to play the CAPEX on/off cycle or a long-term secular demand play. I prefer to participate in the consolidation cycle and ride the earnings growth and hopefully stock price growth. So entry and exit timing becomes more important.

Disc: with covid-19 getting hit, I have exited NH. Will monitor the progress post-COVID19 period.

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Thanks for the response @rupaniamit.

In your opinion, what should one look at to value hospital chains. From the numbers, FCF doesn’t look like a good measure. Just wondering why big names like Apollo and NH have high market caps relative to their historical FCF. Why are investors betting on highly profitable growth in future?. What will work for these businesses (like Apollo Hospitals) that did not work before and why?. Because of the reputation and brand these names might be in business for a long time. But profitable growth for a long time, how?. End of the day, investors want money in their pockets.

What are the few qualitative and quantitative that you think are important for hospital business?. When it comes to shareholder returns, is hospital business comparable to cyclical industries like auto and some manufacturing companies?.

Thank You,
Varun

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I like to keep things simple - a business is worth present value of its future cash flows. This applies to any/all kind of businesses or financial instruments.

FCF doesn’t look like a good measure for CAPEX heavy businesses because its derived after deducting for money spent on future growth. But we need to factor for this investments in future growth. This is where Buffett’s ‘owner earnings’ way of thinking is very helpful. Bharat Rasayan Ltd - #106 by rupaniamit this link may give you some details into this. If you get this concept well, it should answer most of your above questions in your first para.

The most important thing for me is my entry point in hospital business. I generally prefer to enter at first signs of consolidation cycle turning around where 1) gestation period for new hospitals is 2-3+ years and are making positive EBITDAs 2) old hospitals are generating > 15-18% EBITDA 3) oldest hospitals generating > 23% EBITDA 4) no immediate plans to expand the business with huge debt (small expansion with some debt is fine). 5) enough capacity to sweat the assets and de-lever the balancesheet in next 2-3 years. When I see these signs, there is good chance that numbers should come out good for next 2ish years. And if market is not pricing for better numbers in next 2-3 years - that is even better. I can get business that is turning around and also get to enter at good price.

Generally, hospital business is not cyclical business but considered as defensive business. People will visit hospitals if they get heart attack or have to deliver a baby even in peak COVID-19 situation. Some electives can be postponed, but eventually most cannot be postponed beyond a certain time period.

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We had our second meeting with our ValuePicker Carolina group, this time virtually though, however it was another insightful session nonetheless. it was great to meet and have @rohil part of the group and i could relate to his investing journey.
Attached my presentation on Mahindra Holidays Ram Dhawad_CLT VP Meet_July 2020.pdf (2.6 MB)

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Hello, we had met this time (virtually again) and 3 of presented. Its not an immediate actionable idea, but something that should be monitored and invested in the opportune moment, when variables start to materialize.

~Ganesh

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I shared my findings on side project of Historical Long Cycles with the group. Below is the screenshot:

With localization trend catching-up good momentum globally - it makes case for certain themes to play out with higher probability giving us clues as to what the winning sectors may be.

It was a good discussion with the VP USA group.

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Thank you for sharing this @rupaniamit - this is thought-provoking and obviously, for the diligent minded, it should help layout a process/guard rails on “how to think and arrive at, what the next theme is” and for this, one has to put in their work to uncover the companies…

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It was another insightful session. I attempted presenting my understanding of Vaibhav Global.
My presentation attached. Ram Dhawad_CLT VP Meet_Sep 2020.pdf.pptx (1.7 MB)

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It was a great learning experience! Thanks @ramdhawad @ganeshrpl @rupaniamit for insightful presentations.

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Sharing a presentation based upon my recent analysis, esp. taking into account the historical surge in Muthoot Finance share prices and the latest regulatory announcements…as I am intrigued by this unique gold loan business and plan to track it over long term.
Thoughts/suggestions are welcome!
MUTHOOT FINANCE.pptx (1.5 MB)

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Sharing a presentation I did on Pokarna today. Feel free to ask questions/ provide feedback in the pokarna thread.

Pokarna Ltd.pdf (884.2 KB)

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I presented on Cochin Shipyard this time. Attached is my presentation Cochin Shipyard.pdf (1.1 MB)

linking to the original thread - Cochin Shipyard - Very cheap

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Godrej Properties.pptx (948.2 KB)

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I presented on Kolte Patil in our recent meetup.
Kolte Patil VP meet Jan 2021_Ganesh Raao.pdf (673.9 KB)

\Ganesh

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I tried to compile key data from multiple brokerage reports to get an understanding of currently where the cycle is and where it is headed for the Indian Real Estate industry

Company related financials and business data was provided by @aritra_pal and @ganeshrpl.

India RE - Amit Rupani.pdf (1.5 MB)

Disc: small exposure to RE industry through basket approach by investments in Godrej, Kolte, and Sobha. More technical bet than fundamental.

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Li-ion EV Battery Landscape in India.pptx (1.0 MB)

Sharing the presentation on Lithium Ion EV Battery Landscape Development in India.

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Great to see VP groups in USA. Is there a VP Seattle\Washington group?

Hi.
Just wanted to ask how do you file your taxes for nre account. In USA. Thanks

World is so small Aritra , you took my interview for the bank.