The Hindu Business Line : Kovai Medical up on value picking

According to market sources, some players have turned their attention to the 600-bed hospital (operating in the southern region) for its relatively cheap market valuation.

The stock's current market capitalisation is around Rs 60 crore and the expected EPS for the financial year ending Friday is Rs 8. Certain market players are understood to be pinning their hopes on Kovai's sustained turnover growth of 30 per cent. The market price for only the hospital's land and building is about Rs 350 crore. This, according the trading cirles, meant a clear potential for market value appreciation by at least five times.

An analyst with an institutional brokerage said that the downside risk for this dividend paying company (2004-05 dividend was 7.5 per cent) appears limited as hospital/healthcare business is non-cyclical. "This market has been increasing premium on the cyclical and property-based business like hotels, whose performance is largely linked to economic/social environment of the country. Hospitals, with comparable fixed assets and non-cyclical in nature, are likely to fetch better P/Es than hotels going forward," a fund manager observed.

Jayanta Mallick

More Stories on : Stocks | Ear to the ground | Medical Institutions & Hospitals

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