KOVAI MEDICAL CENTER AND HOSPITAL

The Indian healthcare industry is rapidly growing and is being fueled by large investments from existing corporate hospital chains as well as new entrants backed by private equity investors. Health care is going to be a major sector that stimulates the economic growth. Healthcare industry is an evergreen industry and due to health insurance and medical tourism, the sector should see consistent growth. As per the Planning Commission's High Level Expert Group (HLEG), health care industry in India is affected by lack of bed capacity which is presently 9 beds per 10,000 persons and is much lower than the global standard of 29 beds per 10,000 persons. 

Kovai medical center is a super speciality hospital located in Coimbatore.  The company through its subsidiary “Idhayam Hospital” operates another speciality hospital in Erode. The company has two satellite centres at Ramnagar and Erode.  Kovai Medical Center and Hospital Limited started with 150 beds in July, 1990.Over the past two decades, the Center under the visionary leadership of Dr. Nalla G Palaniswami has grown into a giant in the healthcare industry in India. This was acknowledged by the center receiving the award for the best hospital in the non-metro category by the ICICI Lombard and CNBC

The hospital has all most modern facilities including Open heart surgeries ,Steroid free Kidney transplants, Knee replacements, Hip replacements ,Clot dissolution for brain strokes, Blood component therapy, Arthroscopic surgeries, Laparoscopic surgeries etc. In the last 10 years, the net sales of the company grew from 40crs to 320 crs. The company has more than 25% compounded sales growth, profit growth and ROE for the past 5 years. Another important point is that the hospital has 90% bed utilization. With addition of more and more departments with high end facilities, I believe the company will continue to show the past growth along with margin improvement. There are chances of company going for inorganic growth by acquiring small hospitals. Seeing the potential, the promoters have been consistently buying shares of the company. At the cmp of 150 rs, this professionally managed hospital is available at a market capitalization of 160 crs. The hospital is situated in a 20 acre plot in coimbatore. The market capitalization is just the land value of 20 acres in coimbatore. At a p/e below 8, I find value in this company. The daily trading happens in few hundred shares. So buying should be done in a staggered manner.