Shalby surges 12% after Porinju Veliyath buys 0.56% stake via bulk deal

Shares of Shalby, a multi-speciality hospitals chain, gained strongly during Wednesday's trade after ace investor Porinju Veliyath bought 6.1 lakh shares, or 0.56% stake in a bulk deal executed on March 28, 2023.

These shares were purchased for an average price of ₹117 apiece. Taking the purchase price into consideration, the Indian investor and fund manager has invested Rs. 7.13 crore in the small-cap stock.

Following the development, the stock opened strongly at ₹122.40 apiece as against a previous closing price of ₹116.85 and rose further to an intraday high of ₹130.80, up by nearly 12%. At 12:15 p.m., the stock was trading at around ₹126.20 on the BSE.

After hitting a 52-week high of ₹168 in January, the stock witnessed selling pressure and has corrected 25.60% since then. However, the stock is still up by 191% in the last 3-year period.

Shalby is one of the leading multi-specialty chain of hospitals and tertiary care centers in India, offering treatment in over 35 medical disciplines, holding an aggregate capacity of over 2,062 beds with more than 500 active physicians, and more than 3,000 employees, its website shows.

Following the company's Q3FY23 performance, domestic brokerage firm ICICI Direct Research maintained its 'buy' recommendation on the stock with a target price of ₹180 apiece.

The brokerage said the company's Q3 numbers were in line with their estimates on the revenue front but missed their estimates on the margin front due to higher-than-expected total expenditure.

In Q3FY23, Shalby reported a 15.38% rise in its consolidated net profit at ₹15 crore as compared to ₹13 crore in Q3FY22. The revenue from operations during the quarter came in at Rs. 202 crore, a surge of 25.46% from Rs. 161 crore in the corresponding quarter of the last fiscal.

The operating profit rose to ₹34 crore, a growth of 21.40% YoY, while the EBITDA margin came in flat at 17% YoY.

It has identified several key triggers for Shalby's future performance. One such trigger is the company's dominance in the arthroplasty sector, where it holds a 15% market share in all joint replacement surgeries conducted by private corporate hospitals.

The brokerage also noted that the expansion of the arthroplasty and orthopaedics division to include cardiac science, oncology, and neuro-science, with an additional 40% bed capacity, will support organic growth.

Another positive factor is the re-establishment of the implant business in core markets, with a platform to penetrate growth markets and a revenue target of ₹100 crore for FY23.

The company also aims to achieve 2.5x sales in the next three to five years by expanding to 50 franchises, improving occupancy rates, and introducing new service offerings such as home care and Shalby care cards, according to the brokerage.

Meanwhile, earlier in October last year, the company appointed ace investor Vijay Kedia as an additional director of the company. Currently, he owns 6,99,650 shares, or 0.65% of the paid-up equity share capital, as per media reports.

02 analysts polled by MintGenie on average have a 'strong buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.