Shares of Hyderabad-based Nephrocare Health is expected to be in focus after a favourable initiation by brokerage firm InCred because of the company's strong operations and growth potential of the industry.
InCred, in its latest note has initiated coverage for Nephrocare Health with an 'ADD rating' at a target price of Rs 613, an upside of 13.9% from the last closing price of Rs 538. In addition to the operations and industry's growth potential, the brokerage firm has cited the health platform's market leadership in the growing dialysis industry.
As dialysis is a lifelong recurring treatment for kidney failure patients, which highlights Nephrocare's strong revenue visibility, InCred noted. The company operates across 288 cities in India, with nearly 77% clinics in Tier-I and Ill cities, higher than its peers, where compelition is limited and growing demand. This enables the company to grow in the les explored dialysis market in India. It has a higher number of clinics in regions where the number of end-stage renal disease (ESRD), which is the most chronic stage of kidney disease patients are growing.
The clinics are present in multiple micro-markets within a city, providing proximity to patients spread across the city. Currently, Nephrocare Health Services is the largest dialysis provider in India in the organised sector, with over 50% market share, conducted over 3.3 million dialysis sessions for more than 35,000 patients in the fiscal year 2024-25. Nearly, 32% of its revenue from the fiscal year under review was from international operations, giving better margins compared to its competitors.
Around 52% of Nephrocare's clinics operate within partner hospitals and private-public partnership (PPP) clinics, which allows the company to use government hospital infrastructure. This helps to control costs and supports better operating leverage. However, with a large portion of its operations depending on hospital partnerships and government contracts, risks such as contract renewals, payment cycles, and working capital requirement intensity remain.
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