Global Health (MEDANTA)

FairStock Score: 56/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Five-year revenue CAGR of 20.60% shows durable expansion; recent sales growth of 15.97% and profit growth of 18.70% support the growth narrative.
• ROCE of 19.74% and ROE of 15.17% indicate reasonable capital productivity.
• Low debt/equity of 0.25, Altman Z-score of 6.06, and Piotroski F-score of 7/9 suggest sound financial health.
• Latest quarter delivered ₹1,121 Cr sales and ₹95 Cr net profit, implying roughly an 8.5% net margin.

Concerns

• Price of ₹1,110.20 is far above the Graham Number of ₹234.33; margin of safety is -385.99%.
• P/E of 54.05 and P/B of 8.81 leave no valuation cushion.
• Free cash flow is negative at -₹97 Cr despite positive net profit, raising questions about cash conversion.
• Promoter holding of 33.01% and dividend yield of 0.04% offer limited comfort to minority shareholders.

AI Analysis

Let me begin with the price. At ₹1,110.20, Global Health is capitalised at ₹30,610 crore, or about 54 times net profit. Ben Graham would not have paid that multiple unless the margin of safety was evident; it is not. The Graham Number is only ₹234.33, meaning the current price carries a margin of safety of roughly negative 386%. I have seen many compounders in India that look wonderful but fail to reward an impatient buyer. Value comes from price and quality combined. The operating story has merit. Revenue has compounded at 20.60% over five years, with recent sales growth of 15.97% and profit growth of 18.70%. ROCE at 19.74% and ROE at 15.17% are respectable. Debt is modest at 0.25 times equity, and the Altman Z-score of 6.06 suggests the balance sheet is safe. The Piotroski score of 7/9 also points to decent financial health. These are not signs of a deteriorating enterprise. Still, I cannot ignore cash flow. Free cash flow is negative at ₹97 crore in the latest period, even while the company booked ₹95 crore of net profit. A hospital business that cannot convert earnings to cash while expanding is a concern. The dividend yield of 0.04% is meaningless, so my entire return must come from future growth and eventually a higher price someone is willing to pay. Promoter holding of 33.01% is also lower than I would like for a healthcare business where trust and long-term capital matter. This is a fast grower, but at this price it is a rich fast grower. I prefer to wait for a margin of safety, or evidence that cash generation has caught up with reported profits.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer