India is substantially underinvested in healthcare with 17% of the world’s population but only 6% of the beds. Meagre public healthcare spending in India presents a big investment opportunity for private players.
At 0.9 beds per 1,000 people, India ranks low among emerging nations in healthcare provision, even though it carries 20% of the
global disease burden. Leading players Apollo and Fortis plan to cumulatively add 5,000 beds by FY15.
Apollo Hospitals
Leadership position in private healthcare in India, strong brand equity. Strong established presence in Chennai and Hyderabad with improving mix resulting in growth in ARPOBs. Largest player in organized retail pharmacy in India, key beneficiary of FDI in retail. Margin expansion in pharmacy business, Increasing occupancy at Hyderabad cluster, quick ramp up in new beds – esp. under Mumbai cluster.
ACCUMULATE the Stock for a Target Price of Rs 800
Fortis HealthCare
Second largest private healthcare player in India after Apollo; strengthened its domestic position through aggressive acquisitions – Escorts, Wockhardt, Malar, SRL. Entry to diagnostic business and international markets provide good diversification. Listing of clinical establishments REIT, commencement of operations at Fortis colorectal hospital Singapore, recovery of margins in SRL diagnostic business.
The company's stock should be accumulated on Correction.
