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ICICI Securities Report
Thyrocare Technologies Ltd. has reported an improvement in gross margin (+270 basis points YoY) in Q1 FY24 led by a decline in low margin partnership business.
Thyrocare has revamped incentive structure offered to franchisees and this should drive a strong 12-14% volume growth in this segment. It is also trying to diversify overseas to emerging markets like Africa through its business-to-business model.
Strengthening the existing network of franchisee and widening the test menu are the key growth drivers in the near term. We believe Thyrocare can register a revenue/Ebitda/profit after tax compound annual growth rate of ~12%/19%/24%, respectively, over FY23-25E.
The stock trades at 31.8 times FY25E earnings and 17.6 times FY25E enterprise value/Ebitda.
We re-initiate coverage on the stock with 'Add' rating and a discounted cash flow-based target price of Rs 645/share, implying 34.8 times FY25E earnings and 19.4 times FY25E Ebitda.
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