Indraprastha Medical -- Be Patient

Introduction:

Indraprastha Apollo Hospitals, India’s first JCI accredited hospital, is a joint venture between the Government of Delhi and Apollo Hospitals Enterprise Limited. Commissioned in July 1996, it is the third super-specialty tertiary care hospital set up by the Apollo Hospitals Group. Spread over 15 acres, it houses 57 specialties with more than 300 specialists and more than 600 operational beds, 19 operation theatres, 138 ICU beds, round-the-clock pharmacy, NABL accredited laboratories, 24-hour emergency services and an active air ambulance service. Apollo Hospitals Delhi has the leading programme in kidney and liver transplant in the country. The first successful pediatrics and adult liver transplants in India were performed at Indraprastha Apollo Hospitals. The hospital is at the forefront of medical technology and expertise. It provides a complete range of latest diagnostic, medical and surgical facilities for the care of its patients. The Hospital has introduced the most sophisticated imaging technology to India with the introduction of 64 slice CT and 3 Tesla MRI. Indraprastha Apollo has also pioneered the concept of preventive health check programmes and has created a satisfied customer base over decades.

In the year 1986, The Govt. of NCT of Delhi under the direction of the then Prime Minister, had decided to set up a multi specialty hospital. Indraprastha Medical Corporation Limited (IMCL) was promoted in the joint sector by the Govt. of NCT of Delhi and Apollo Hospitals Group and was incorporated as Public Limited company on 16th March, 1988 to set up a multi super specialty hospital in Delhi namely “Indraprastha Apollo Hospitals”. The incomplete building was handed over to the Company at a nominal lease rental of Rs. 1/- per month. A Management Agreement was also entered on the same date between Indian Hospital Corporation Ltd. (an Apollo Hospitals Group Company) and Indraprastha Medical Corporation Ltd. for providing technical and management services to the Company at a nominal management fee of Rs. 1/- per annum. This was the first joint venture Company and a first of its kind in Healthcare under the public-private partnership model. Later on, 15 acres of land at Delhi Mathura Road, Sarita Vihar, New Delhi, together with building constructed out of the money (including interest) received from Sport Authority of India was leased to the company for a period of thirty years up to July 31, 2023 renewable for a further period of thirty years on the same terms and conditions as agreed before. The Hospital was inaugurated in July 1996 and commenced various services in a phased manner.

As per the terms of the lease deed, the Company shall admit free of charge such patients as may be recommended by the Lt. Governor of the National Capital Territory of Delhi up to 1/3rd (one third) of the bed strength consisting of 600 beds or such number of beds as near thereto as may be commissioned for the time being, earmarked for such purpose by the Company. The Company shall provide free diet, medical diagnostic and such other facilities to the patients aforesaid as are required by the patients for indoor treatment. The Company shall also provide free medical, diagnostic and other facilities for not less than 40% of it’s out-door patients. There was also an implied obligation on account of custom duty exemption for import of medical equipment prevailing at the time when the Hospital project was conceived. However, the hospital could not avail the benefits due to relocation of the project and consequent time delay during which period the custom duty exemption on import of medical equipment was withdrawn. A Public Interest Litigation (PIL) was filed in the year 1997 in the High Court of Delhi for seeking direction that the Company should also provide free medicines and medical consumables to the Patients referred by the Govt. of NCT of Delhi for free treatment in the Hospital. The Petition was contested by the Company. An interim order dated 29.5.1998 was issued by the Hon’ble High Court of Delhi and accordingly the Hospital has been providing free treatment exclusive of medicines & medical consumables to patients referred by the Govt. of NCT of Delhi. The Delhi High Court decided the PIL vide its order dated 22nd September, 2009, and has held that free treatment provided by the Hospital as per the terms of the lease deed shall be inclusive of medicines and consumables. The Company has filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court of India against the impugned judgment and order of the Hon’ble High Court of Delhi. The Hon’ble Supreme Court of India has admitted the SLP and passed an interim order on 30.11.2009. In pursuance of the interim order, the Hospital is providing free treatment to the patients referred by the Govt. of NCT of Delhi exclusive of medicines & medical consumables. The matter is pending before the Supreme Court of India.

Indraprastha Apollo Hospitals is distinguished by its focus on Clinical Excellence. It has participated in one of the most important programs of the Apollo Hospitals Group known as ACE@25 - a unique clinical balanced scorecard focusing on evidence based quality care and a safe environment for patients. The scorecard measures 25 clinical parameters every month, benchmarking them against the best institutions in the world and scores them on a 4 point scale, colour coded as green, orange or red. Each of the   participating hospitals is thus measured on a 100 point score and reported online for monitoring and sharing of best practices. A score of 75 and above is considered good performance and in the green zone. The average ACE @ 25 scores for the Indraprastha Apollo Hospitals this year has been 76.66. With sustained efforts, the Average Length of Stay (ALOS) of patients in the Hospital was brought down from 5.09 days to 4.8 days. A number of other initiatives were also undertaken in critical areas of hospital operations directly impacting patient care. The average turn around per dialysis chair per day has also got increased. Being the first hospital in the country to get Joint Commission International (JCI) accreditation, Indraprastha Apollo Hospitals has always strived to ensure all quality norms are being met. This year Indraprastha Apollo Hospitals continued to build on the strategy of focusing on the Apollo Centers of Excellence, with Orthopedics being identified as a key area. Anticipating joint replacement surgeries (particularly knee replacements) as a high growth area, the Hospital did a number of activities to increase the numbers of knee replacement surgeries. The Apollo Knee Clinics was set up in November 2009, followed by a focused marketing campaign through hoardings, posters and hand outs. Following these initiatives, significant growth in the number of surgeries was recorded significant renovation and up gradation work was completed during the year, which should add to patient comfort and help achieve more operational efficiencies. Among others, a new orthopedics operation theatre, a 5-bed ICU for critical cardiac care patients, a 12 bed Multi Organ Transplant Unit for Renal Transplant patients, a Mezzanine in the atrium for ICU patient attendants and international patient lounge were commissioned. Fifty eight patient rooms and three OPDs were also renovated during the year.

Financials:

Hospital Sales have increased from 204 Cr in 2006 to 458 Cr in 2011. Profit in this period increased from 16.66 Cr to 30.73 Cr this year resulting in an EPS of 3.35 Rs as compared to an EPS of 1.64 Rs/share. Dividend in the same period increased from 1.25 Rs/share to 1.6 Rs/share this year. On Margins front and on other parameters this hospital compares well with other hospitals. It is likely that this hospital will continue to grow at a rate of 10-15 % for years to come. No major expansion being in a Joint Venture can be expected to come out of it.

Technical Analysis:

For last six years the scrip is not able to go beyond 50-60 Rs band and on downside it have very good support in band of 20-27. The scrip ideally can be bought in the region of 25-27 Rs/share. In case of severe correction the scrip is unlikely to go below this level this time. 26.4 will be 76.4 % correction of 18.05 to 53.5 Rs rise. This may be the target of share on downside. No signs of turnaround on Weekly MACD n Weekly RSI has been observed on the chart.

Investment Theme:

The Investment Theme in this stock is dividend yield and defensive nature of stock. It is ideal stock in place of FD as it is likely to give 12-15 % return p.a. in general including dividend over long period of time. If price of acquisition is in ur favour then return can be more. I have 1000 shares in this hospital at present  and plan to invest 35000-40000 Rs more in case of decline in share price to 25-27 Rs band. In case it goes up to 50-60 , I will quit from this scrip .