>FUNDAMENTAL PICK OF THE WEEK (ICICI DIRECT)

Indraprastha Medical

Established in 1995, Indraprastha Medical Corporation has established itself well over the past 10 years. The company’s commitment to continuous improvement and focus on clinical outcomes has resulted in a significant improvement in resource utilisation. Increased focus on pathways, faster turnaround of operation theatres, decreasing length of stay and the use of minimally invasive surgeries has significantly contributed to growth in revenues while lowering cost to the patient. With a shortage of hospital beds coupled with growing medical tourism and rising demand for private healthcare services, Indraprastha Medical is well placed to leverage the growth opportunities due to its low debt-equity ratio and strong cash position.

Company Background
Indraprastha Medical is an associate company of Apollo Hospitals, in which the latter holds nearly 18.25% stake. It is a healthcare company, which operates through Indraprastha Apollo Hospital. Indraprastha Apollo, a 695-bed specialty hospital, was commissioned in December 1995 in collaboration with the New Delhi administration. The company offers various healthcares services. It provides diagnostic, medical and surgical facilities through its chain of hospitals. Its services include surgical services, dental, cardiothoracic, neuro, vascular, joint, plastic, cosmetic and general surgeries. It is India's first corporate hospital. It primarily operates in India and is headquartered in New Delhi.

Future plans
To capitalise on the long-term growth opportunity in the healthcare space, the company is expanding itself gradually. The company has recently announced plans to augment its facilities by an additional 175 beds. The project is expected to be complete within a year. It further plans to set up more than 10 satellite clinics in and around Delhi to facilitate easy availability of Apollo-type medical services to a larger cross-section of society. These clinics are slated to take the shape of mini-hospitals with all basic back-up emergency services aimed at providing posttreatment facilities to Apollo Hospitals patients. The hospital is also investing in upgrading technology. The demand for quality healthcare infrastructure and services in India far exceeds the supply. Thus, any addition to capacity would have incremental positive impact on its bottomline.

Sector outlook
In India, the demand for quality healthcare infrastructure and services far exceeds the supply. Rising literacy rates and growing healthcare awareness will further drive the demand for quality healthcare in India. This is further supplemented by the rapid increase in middle and rich segments of the population. According to Technopak Advisors report ‘India Healthcare Trends 2008’, India needs investments of $82 billion in order to fill up the long standing gap in demand and supply. The government can meet only 15% of this demand. Moreover, the public sector healthcare delivery infrastructure and facilities are in a poor state. Thus, the overall outlook for private players in this sector is expected to remain positive. Indraprastha Medical is well placed to leverage the growth opportunities due to its low debt-equity ratio and strong cash position.

To see full report: INDRAPRASTHA MEDICAL