Valuation for Hospital Industry

In: Business and Management

Submitted By AM02
Words 5097
Pages 21
| Valuation of Companies in the Hospital Industry in India | | | September, 2015 | Group 9 – Section B | | Group Members * Abhijnan Dasgupta (14P181) * Aditya Thangeda (14P183) * Apurba Mukherjee (14P189) * Nikhil Sharma (14P210) * Supreet S (14P232) |

Table of Contents 1 Overview of Hospital Industry in India 2 1.1 Introduction 2 1.2 Market Size 2 1.3 Growth drivers for healthcare industry 3 1.3.1 Rising GDP Per Capita 3 1.3.2 Favourable Demographics 4 1.3.3 Disease profile 4 1.3.4 Rising Health Insurance in India 4 1.3.5 Rising Medical Tourism 5 1.3.6 Favorable government policies 5 2 Valuation of Companies 6 2.1 Apollo Hospital 6 2.1.1 Key Stock Statistics and Shareholding Pattern 6 2.1.2 Financials of the Company 6 2.1.3 Assumptions for Valuation 8 2.1.4 WACC Calculation 8 2.1.5 EBIT Calculation 10 2.1.6 Projected Cash Flows 10 2.1.7 Conclusion 11 2.1.8 Limitations 11

Overview of Hospital Industry in India
Healthcare has become one of India's largest sectors - both in terms of revenue andemployment. The industry comprises hospitals, medical devices, clinical trials,outsourcing, telemedicine, medical tourism, health insurance and medicalequipment.
The Indian healthcare delivery system is categorised into two major components -public and private. * Public Healthcare System: The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basichealthcare facilities in the form of primary healthcare centers (PHCs) in rural areas. * Private Healthcare System: The private sector provides majority of secondary, tertiary and quaternary careinstitutions with a major concentration in metros, tier I and tier II cities.
Market Size
According to estimates of IBEF, the overall Indian health care market today…...

Similar Documents

Valuation, please write to Tuesday, September 13, 2011 Description Summary Latest Result Valuation Matrix ROE Analysis Income Statement Balance Sheet Cashflow Statement Quarterly Result Growth Analysis Comparative Analysis Income Statement Balance Sheet Index Analysis Income Statement Balance Sheet Ratio Analysis Annual Quarterly TTM Analysis Technical Analysis Page 3 3 3 3 4 5 6 6 7 8 8 8 9 9 9 10 10 11 11 12 CONTENT About Tanay & Peu Our passion lies in the field of financial research & Investment management and we intend to apply our knowledge gained over a period of years through intense study and keen observation of the nuances of financial markets and instruments to real life scenarios. We possess expert knowledge of financial products and markets as evidenced by top notch qualifications earned by us , all in the first attempt and keep ourselves abreast with the latest happenings and innovations taking place in financial landscape. 1. Expertise in Portfolio Management, Product optimization, Product performance Analysis, Financial Reporting/ Planning, Cash Flow Analysis, Ratio Analysis, Budgeting, Forecasting, Mergers & Acquisition and knowledge of GAAP/ IFRS 2. Possess Strong Financial Modeling skills including DCF, LBO and other techniques. Possess ability to research all asset classes in a broad range of industries and geographies. 3. Strong equity research, finance, accounting and advisory and assurance experience 4. Expertise......

Words: 4911 - Pages: 20


...AMITY INTERNATIONAL BUSINESS SCHOOL ANALYSIS AND VALUATION OF EQUITY SECURITIES OF TATA CONSULTANCY SERVICES , INFOSYS AND WIPRO LTD. SUBMITTED TO: SUBMITTED BY : Ms.Vibha Singh Atreya Vyas A1802011445 Section C MBA IB TABLE OF CONTENTS S.No | Topic | Page Number | 1 | Introduction | 3 | 2 | Research Methodolgy | 4 | 2.1 | Research Objectives | 5 | 2.2 | Proposed Literature Review and Tentative Hypothesis | 5 | 3 | Data Collection | 7 | 4 | About Companies and Research | 8 | 5 | Limitation of Study | 11 | 6 | References | 12 | 1) INTRODUCTION In today’s era every company needs cash or cash equivalents to run its day to day activities smoothly. The major sources through which companies can borrow money are: * Bank Loans * Debenture * Preference Share * Equity Share. Bank Loan is the amount which companies receive after fulfilling all the required information which is mandate according to the rules of banks. Companies need to mortgage its assets as guarantee for the future repayment of its loan amt. on the loan bank charge interest which company has to pay irrespective of the fact that company is in profit or loss. Debentures are the instruments which are used to acknowledge the receipt of the debt form the debenture holders. Debenture Holders are sought lenders for the company. They...

Words: 4106 - Pages: 17


...Bank Valuation: Comparable Public Companies & Precedent Transactions Picking a set of comparable companies or precedent transactions for a bank is very similar to what you’d do for any other company – here are the differences: 1. The set has to be more specific due to differing regulatory requirements for different countries and types of banks. For example, if you’re looking at large-cap commercial banks in the US, you should not include regional banks or insurance companies even if they’re also large-cap – nor should you include Credit Suisse or Deutsche Bank, because they’re not US-based. 2. Rather than cutting the set by revenue or EBITDA, you use metrics like total assets or total deposits to determine the “size” of banks. 3. Instead of traditional metrics like revenue and EBITDA, you list the metrics and multiples that are relevant to a bank: EPS, Return on Equity (ROE), Book Value (BV), P / E, P / BV, and so on. Operating Metric Equity Value Book Value (BV) How to Calculate It Shares Outstanding * Share Price Shareholders’ Equity(1) What It Means How much are we worth? How much are we worth according to our assets rather than the market? How much are we worth to everyone except preferred shareholders? How much are we worth according to our incomeproducing assets? How much money do we make after taxes? How much money is left to pass on to common shareholders? How much in dividends could we potentially issue to each common shareholder? Does our market cap overvalue or......

Words: 1938 - Pages: 8


...strategy is to provide customers with everyday low prices. It is known for its discount stores. Wal-Mart’s competitors are Sears, Target, Gap, limited, Dillard’s, Macy’s and JC Penny. The major membership only warehouse competitor is Costco Wholsale. Wal-Mart became a publicly traded firm in 1970 with an initial stock price of $16.50 per share and subsequently, in March 1974, declared its first cash dividend of $0.05 per share (after two two-for-one stock splits). It had undergone 11 two-for-one stock splits, and thus, an original lot of 100 Wal-Mart shares had grown to 204,800 shares after the most recent split in April 1999. For this valuation we will be using the dividend discount model, the capital asset pricing model (CAPM) and price/earnings multiples. Dividend Discount Model (DDM) In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor. [pic] I. Dividends in Perpetuity The current stock price of Wal-Mart using this method is the present value of all expected future dividends, discounted at an investor’s required rate of return. A share is valued by forecasting futures dividends of Wal-Mart. • Constant growth dividend discount model. According to the constant growth DDM, the current value of a firm’s......

Words: 1158 - Pages: 5

Key Drivers for the Growth of Hospital Industry in Nepal

...Key Drivers for the growth of Hospital industry in Nepal 1. Technological advancement Technological advancement not only helps in the growth of the manufacturing industry but also helps in the growth of service industries like hospital by the advancements in medical technologies. Advancement in technology has shortened the adoption curve for new technologies; the benefits of the advancements are clearly visible in terms of smoothening of workflow, ROI, and hospitals ability to treat more patients in the same time span. Some major examples of this phenomenon are: * Increase in number of minimally invasive surgeries: With every passing day a higher number of hospitals are shifting towards minimally invasive procedures. This concept has been equally appreciated by the patient and provider both, benefits to the patient being early discharge and return to normalcy and for the provider a faster turnaround thus higher profitability. This phenomenon has been helped by advancements in the field of laparoscopy, endoscopy, cath labs, etc. * Home health: With time becoming a precious commodity a significant chunk of population is opting for devices which can provide diagnosis, care within the home environment. This phenomenon helps the patients in saving time and utilizes the saved time for other productive activities. The development in the field of blood glucose monitoring, insulin management, sleep apnea, cardiac rhythm management will be the main growth......

Words: 834 - Pages: 4


...VALUATION TECHNIQUES Vault Guide to Finance Interviews Valuation Techniques How Much is it Worth? Imagine yourself as the CEO of a publicly traded company that makes widgets. You’ve had a highly successful business so far and want to sell the company to anyone interested in buying it. How do you know how much to sell it for? Likewise, consider the Bank of America acquisition of Fleet. How did B of A decide how much it should pay to buy Fleet? For starters, you should understand that the value of a company is equal to the value of its assets, and that Value of Assets = Debt + Equity or Assets = D + E If I buy a company, I buy its stock (equity) and assume its debt (bonds and loans). Buying a company’s equity means that I actually gain ownership of the company – if I buy 50 percent of a company’s equity, I own 50 percent of the company. Assuming a company’s debt means that I promise to pay the company’s lenders the amount owed by the previous owner. The value of debt is easy to calculate: the market value of debt is equal to the book value of debt. (Unless the debt trades and thus has a real “market value.” This information, however, is hard to come by, so it is safe to use the book value.) Figuring out the market value of equity is trickier, and that’s where valuation techniques come into play. The four most commonly used techniques are: 1. 2. 3. 4. Discounted cash flow (DCF) analysis Multiples method Market valuation Comparable transactions method Generally, before...

Words: 11224 - Pages: 45


...Executive Summary Cement industry of Bangladesh is in its growth stage. The industry is developing day by day. Lafarge Surma Cement Limited is one of the major producers of quality cement in Bangladesh. As per the course requirement we are told to conduct the fundamental analysis of Lafarge Surma Cement Limited. The company is a listed company and its shares are traded in the capital market. We have collected the annual reports of last couple of years and from the data we have prepared the proforma income statement, free cash flow and then ultimately the valuation of the company’s share. We have shown the market strategy of the company. They prefer differentiation that is high price for high quality. The industry life cycle indicates that Cement industry is in its growth stage. We have shown the competitive forces along with Michael Porter’s five force model. Competitive advantage and disadvantages are described there. Then the ratio analysis gives us the performance of the company. Then the prospective analysis gives us the intrinsic value of the company’s share, which is 16.79 Tk. whereas on 31 December, 2012 the market price was around 32 Tk. We have confirmed our valuation with the help of Sensitivity, Scenario and Simulation analysis. After the valuation we have found that the share is priced higher than the intrinsic value. That means the share is Overpriced. Holders of the share should sell the share or should take a short position of Lafarge surma’s’s share.......

Words: 8111 - Pages: 33


...topics presented (Case 2). Objectives Throughout the paper, we will comment on the presenting team’s paper content and figures. Also, we will show why the presenting team’s calculations and paper content lacked some very important issues brought up in the case, such as, shareholder concerns and the proper way to calculate the price for the leveraged buyout (LBO). Some of the main differences between their case and ours are: • How to calculate the price for the LBO o They chose to use EBITDA o After reading various articles on LBOs we feel net present value (NPV) is a better valuation tool 3 • Focus on various financial ratios o They calculated 22 different financial ratios that were not fully analyzed and they unfairly compared Seagate to the industry (Seagate is vertically integrated making it a different entity) o We feel that the Du Pont Identity allows us to better compare Seagate to the industry • Concern for the shareholders of Seagate and VERITAS o The presenting team failed to fully analyze this aspect but the case addressed this as a major concern, “the Silver Lake transaction had to be approved by both Seagate and VERITAS shareholders” (Case 2) While the presenting team touched on some very important issues, they did not follow through with their information. Throughout the paper, we will compare and contrast our ideas to theirs and show why our figures are better suited for this type of business transaction. Overview In the next few sections we......

Words: 8426 - Pages: 34

Hospital Services Industry

...Hospital Services Industry Hospital Services Industry The hospital services industry has grown exponentially in the recent decades to become a major employer and income generator that can also effect the local and regional economic scenes. This extremely fast-growing sector of the United States has every reason to continue the current trend. This paper will analyze the current hospital services industry from an economic perspective and focus on potential points of improvement. Discussion The United States increased expenditures in the hospital services industry is growing at a concerning rate and isn’t showing any signs of slowing down. According to the National Health Center for Statistics, the national health expenditure as a percent of gross domestic product (GDP) has grown from 12.1 percent in 1990 to 17.4 percent in 2013 (National Health Center for Statistics, 2014). Economic growth can be measured by using the GDP and the United States’ GDP ratio allocated to health care has continued to rise faster than most other developed nation (Hockenberry & Thorpe, 2014). The continuous growth and comparison to other developed nation is the primary concern for economists. In order to obtain a clear picture of the growth it is beneficial to analyze health care data over the course of several decades. In the table below several data components are analyzed including: the total health expenditures, per capita health expenditures, health as a percent of GDP, health......

Words: 1542 - Pages: 7


...their own management or wealthy raiders, who saw potential value in restructuring or breaking up these firms. In the 1990s, we saw a wave of consolidation in the media business as telecommunications firms acquired entertainment firms, and entertainment firms acquired cable businesses. Through time, firms have also acquired or merged with other firms to gain the benefits of synergy, in the form of either higher growth, as in the Disney acquisition of Capital Cities, or lower costs. Acquisitions seem to offer firms a short cut to their strategic objectives, but the process has its costs. In this chapter, we examine the four basic steps in an acquisition, starting with establishing an acquisition motive, continuing with the identification and valuation of a target firm, and following up with structuring and paying for the deal. The final, and often the most difficult, step is making the acquisition work after the deal is consummated. Background on Acquisitions When we talk about acquisitions or takeovers, we are talking about a number of different transactions. These transactions can range from one firm merging with another 1 2 firm to create a new firm to managers of a firm acquiring the firm from its stockholders and creating a private firm. We begin this section by looking at the different forms taken by acquisitions, continue the section by providing an overview on the acquisition process and conclude by examining the history of the acquisitions in the United......

Words: 21338 - Pages: 86


...First, American Cable Communication (ACC) and AirThread could help each other compete in the industry that was moving more and more bundled service offerings. Second, the acquisition could help both companies expand into the business market. Third, ACC was in a unique position to add value to AirThread’s operations because the acquisition could save AirThread more than 20% in backhaul costs. The reasons above make us believe that the synergy is positive and the acquisition is a good idea. Based on the projected cash flow information provided in the case, what is the stand- alone value of AirThread? Show the cash flow forecasts, discount rate, and your valuation model. 
(Hint: pay attention to the Working Capital Assumptions provided in Ex 1. For example, Accounts Receivable 41.67× means on average it takes 41.67 days to receive payment from customers. ) According to Jennifer Zhang’s analysis, we divide the stand-alone value of AirThread into two parts—operating value and non-operating value-- and then add the two parts together to get the result. First, when we calculate the operating value, we use the DCF model. We pick the risk-free rate from historical annual returns investments on T-bonds from 1928 to 2007 and use the geometric average, which is 5.4%, and collect the 5% equity market risk premium from the casebook. We assume the equity β as the average equity β of the industry, which is 0.96 (but we exclude one company that is Agile Connections, because the net......

Words: 1388 - Pages: 6


...Analysts have put estimates on the potential of 500 full service locations. CPK's strategy includes the opening of 16 to 18 new locations this year including the closing of one location. In the second quarter of 2007, revenue increased 16% while comparable restaurant sales grew by 5%. Performing comparatively well against its competitors, CPK's stock has been depressed recently falling to $22.10 in June making their P/E equal to 31.9 time current earnings. In comparison with BJ's Restaurants with a P/E of 48.9, CPK appears undervalued. CPK's direct competitor, BJ's pays no dividend and has a similar beta and therefore it makes for a good comparative company. Despite uncertainty in the industry and general poor performance among competitors, CPK is performing marginally better than the overall industry. Susan Collyns has several decisions that need to be made. Her two primary issues are how to finance expansion and the firm’s most appropriate capital structure. The focus of this analysis will be on the change in capital structure through the repurchase of shares at today’s market price of $22.10. The effect of the repurchase will be analyzed from an EBIT breakeven, ROE, EPS, Cost of Capital, and stock price perspective. It should be noted that there is an $85 million cost to fund further expansion of their full service restaurants. This is a known expense that will have to be financed by issuing equity or leveraging the company by taking on debt. How does debt add value......

Words: 1638 - Pages: 7

Hospital Administration - What Are the Types of Hospitals Critically Examine the Present National Health Policy and Its Impact on the Private Healthcare Industry in India

...WE PROVIDE CASE STUDY ANSWERS, ASSIGNMENT SOLUTIONS, PROJECT REPORTS AND THESIS ARAVIND - 09901366442 – 09902787224 HOSPITAL ADMINISTRATION Case I HOSPITAL ADMINISTRATION – ROOT OF THE PROBLEM. Questions: 1. Outline the reasons as to why hospital administration can only be taught by doctors. Present a counter analysis to oppose this point of view. 2. On what fronts do various institutions compromise while designing hospital administration courses? What are the steps you may take to ensure a wholesome teaching for the hospital administration course? 3. What do you mean by Hospital? Focus on the significance of the role played by a Hospital Administrator in a Hospital. CASE II INDIAN HEALTHCARE SYSTEM Questions: 1. Discuss in detail the difference in Private Hospital and Government Hospital from the aspects of a. Functioning b. MIS Maintenance c. Purview of Consumer Act d. Speed of Service e. Accountability towards the patient. 2. What are the types of hospitals? Critically examine the present National Health Policy and its impact on the private healthcare industry in India. CASE III LIFE SAVING A PRIORITY OR SECONDARY? Questions: 1. What are the issues that influence a Doctor’s decision in accepting/rejecting any MLC and treating the patient? 2. “The psychological variables considerably influence the behavioral profile.” Discuss this statement in the context of above article. 3.......

Words: 881 - Pages: 4


...Valuation M&A involves using more than one valuation technique to arrive at a valuation that we think is fair. The most common techniques used are: ➢ Comparable Publicly traded companies (“Public Comps”) – this analysis indicates how the stock markets are valuing companies that are similar to the target ➢ Precedent Comparable Transaction analysis (“Transaction Comps”) – this analysis indicates the valuations at which prior M&A transactions have been done in the same industry as that of the target. ➢ DCF analysis – is one of the most important valuation techniques ➢ Sum-of-the-parts analysis – If a target has more than one lines of business, the financial advisor will value each business separately. Therefore, each “part” might have its own Public Comps, Transaction comps and DCF (with different WACCs for each part). The total value is the sum of the parts ➢ Other –depending on the unique characteristics of the transaction, financial advisors will perform a number of other analyses to arrive at fair value like Leveraged Buyout (“LBO”) Analysis, Historical Exchange Ration analyses etc. Valuation M&A involves using more than one valuation technique to arrive at a valuation that we think is fair. The most common techniques used are: ➢ Comparable Publicly traded companies (“Public Comps”) – this analysis indicates how the stock markets are valuing companies that are similar to the target ➢ Precedent Comparable Transaction analysis......

Words: 343 - Pages: 2


...The Major Differences in Hospitals Today and 100 years ago. The Roles of modern hospitals Student’s Name Name of the University Professor's Name 30 July 2012 Author’s note The Major Differences in Hospitals Today and 100 years ago. The Roles of modern hospitals As defined by Miller (1997) a hospital is an institution which provides beds, meals, and constant care for patients while they undergo medical therapy at the hands of professional physicians. These services are meant to restore the patients’ health. Currently the hospitals have diversified their functions. The ownership of hospitals in the modern society ranges from worldwide organisations, Governments, nongovernmental organisation to individuals. Despite this diversity in ownership, the quality of services offered are mainly controlled and monitored by either different world wide organisations or respective governments. Hospitals as important organisations, have become better as compared to 100 years ago As compared to 100 years ago, hospitals have changed in a great way. This is because of the outbreak of different new diseases. Modern hospitals are highly......

Words: 604 - Pages: 3