In This Article:
Thyrocare Technologies Limited (NSE:THYROCARE), a ₹36.0b small-cap, operates in the healthcare industry, which faces a shift towards more data-driven approached to address behavioural and physical health issues of chronic illness and aging patients. Healthcare analysts are forecasting for the entire industry, a highly optimistic growth of 39% in the upcoming year , and an enormous growth of 59% over the next couple of years. However this rate still came in below the growth rate of the Indian stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Thyrocare Technologies is a laggard or leader relative to its healthcare sector peers.
See our latest analysis for Thyrocare Technologies
What’s the catalyst for Thyrocare Technologies’s sector growth?
Providers that are beginning to turn their attention to more transformative initiatives to bend the cost curve. In the past year, the industry delivered growth in the teens, though still underperforming the wider Indian stock market. Thyrocare Technologies leads the pack with its impressive earnings growth of 25% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 22% compared to the wider healthcare provider sector growth hovering in the thirties next year. As a future industry laggard in growth, Thyrocare Technologies may be a cheaper stock relative to its peers.
Is Thyrocare Technologies and the sector relatively cheap?
Healthcare companies are typically trading at a PE of 36.26x, higher than the rest of the Indian stock market PE of 17.01x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 9.6% on equities compared to the market’s 9.3%. On the stock-level, Thyrocare Technologies is trading at a PE ratio of 38.04x, which is relatively in-line with the average healthcare provider stock. In terms of returns, Thyrocare Technologies generated 21% in the past year, which is 12% over the healthcare provider sector.
Next Steps:
If Thyrocare Technologies has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a healthcare provider industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the healthcare sector. However, before you make a decision on the stock, I suggest you look at Thyrocare Technologies’s fundamentals in order to build a holistic investment thesis.