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Sensing a multi-decadal opportunity for the private companies in the healthcare segment, domestic brokerage firm Anand Rathi has initiated coverage on 6 hospital stocks.The firm has suggested a ‘buy’ rating for Max Healthcare, Rainbow Children’s Medicare, Krishna Institute of Medical Sciences (KIMS), and Jupiter Life-Line Hospitals and a ‘hold’ rating for Global Health (MEDANTA), and Narayana Hrudayalaya."Accounting for 71% of India’s healthcare market, healthcare delivery services constitute the largest segment. Favorable demographic shifts, a rising proportion of non-communicable diseases and greater ability to pay are the sector’s key structural drivers which can lead to a 15% CAGR to Rs 7.7 lakh crore over FY22-25,” states the coverage report.Given the hospital demand-supply mismatch (bed capacity half the global average), which is unlikely to be bridged in the near to medium term, we regard longer life-expectancy and heightened health awareness to be key drivers, the brokerage said.This, coupled with a rising share of NCDs (70% of deaths in India) and deeper penetration of health insurance and government schemes, would result in greater need for tertiary care, it added.ALSO READ | 5.5 lakh retail investors buy Vodafone Idea shares in Q4“We reckon private hospitals would benefit given the country’s inadequate healthcare infrastructure and greater health awareness,” said the brokerage.Below are the top picks by the brokerage firm from the sector:Max HealthcareOver the next few years, the company aims for approximately a two-fold expansion of its brownfield projects and an increase in bed capacity. The company has maintained superior operating parameters compared to its peers, with rising occupancy rates, reduced Average Length of Stay (ALOS), and a favourable case-payor mix, primarily operating in tier-1 cities. With its expansion plans, improved payor mix, and lab scale-up, the company's outlook and valuation appear promising.The company has a ‘buy’ rating, with a target price of Rs 950, which suggests an upside potential of 25%.Rainbow Children’s MedicareRainbow’s moat is its calibrated focus on pediatric and perinatal services, a model still in a nascent stage in India and only thriving in some developed economies. Given its strong pedigree in this field and its hold on unit economics, the company is poised to replicate the model in other Indian cities. The brokerage expects it to clock 19%/20% revenue/EBITDA CAGRs over FY24-26, boosted by capacity added and better operating leverage.With a ‘buy’ rating, the target price for Rainbow Medicare has been set at Rs 1,470, foreseeing an upside of 11%.Krishna Institute of Medical SciencesThe company is a leader in South India’s healthcare market with 12 multi-specialty hospitals and a unique business model of affordable pricing through cost rationalization. Strong financial performance with 17%/16% revenue/EBITDA CAGRs and Rs190 crore FCF generation over FY24-26 is forecasted.With an upside potential of 19%, the firm has a ‘buy’ rating, with a target price of Rs 2,370.Jupiter Life-Line HospitalsAnand Rathi expects a 19% revenue CAGR over FY23-26, aided by the scale-up in occupancy at its Pune and Indore units. Further, the recent rate of revision in insurance contracts for the company’s Pune unit and insurance tie-ups for its Indore unit should boost Average Revenue Per Occupied Bed (ARPOB) and occupancy. Overall, it anticipates 22%/52% EBITDA/PAT CAGRs over FY23-26, with healthy 20% return ratios.Rhe stock is a ‘buy’, with an upside potential of 10% with a target price of Rs 1,380Global Health (MEDANTA)Continued growth is believed to be led by higher capacity utilisation at new hospitals, a rising share of international patients in the overall revenue pie and better ARPOB backed by a superior payor-case mix. Considering its strong business prospects, the brokerage firm expects it to post 14%/16%/15% revenue/EBITDA/PAT CAGRs over FY24-26.A target price of Rs 1,430, with a ‘hold’ rating has been given, which signals an upside of 1.7%Narayana HrudayalayaA higher maturity mix in hospitals, steady performance of flagship hospitals in India and better profitability of new hospitals (SRCC, Gurugram, Dharamshila) solidify the company’s position in India. Ahead, it is believed that brownfield expansion along with the Cayman expansion would aid growth. Accounting for a chunk of the growth would be operationalising the new hospitals, which could pose margin risk.Backed by the above, the brokerage has a ‘hold’ rating with a target price of Rs 1,380, which indicates an upside potential of approximately 10%.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

"However, on the largecap side, the valuations are not so expensive. It is just about 5% or 6% higher than the historical averages. So, if you want to construct a portfolio, having a little bit of tilt towards largecaps is a better way to manage risk," says Harsha Upadhyaya, CIO-Equity, Kotak AMC.Let us start with the view in the market. Everybody is of the view that you need to be cautious. FIIs are selling, global geopolitical concerns are there, but none of the major indices are a distance away from the recent highs. The smallcap index is 1% away from its all-time high. The midcap index is 2 and Nifty is off by about 1%. So, if there is nervousness in the market and if there are concerns around valuations, then why are markets ignoring it? Why is price action so strong?Clearly, valuations continue to be at elevated levels. Your question is pertinent that why is market not showing that nervousness. But if you look at how markets reacted a couple of weeks back when disclosures were announced on the mutual fund categories like smallcap and midcap, even without any fundamental negative we did see smallcap and midcaps correcting in double digits whereas Nifty was down only about 2% or 3% at that point of time. So, that clearly shows that there is nervousness in the market. It is just that the liquidity has also been quite strong at this point of time. So, to an extent, that is getting nullified at this point of time. However, given the current state of valuations, one needs to be cautious, that is what we believe. However, on the largecap side, the valuations are not so expensive. It is just about 5% or 6% higher than the historical averages. So, if you want to construct a portfolio, having a little bit of tilt towards largecaps is a better way to manage risk. So, what is your portfolio strategy right now?For us, we generally do not keep too much of cash in our portfolio. So, most of our portfolios are fully invested. Cash is hardly about 1% to 2% just to manage liquidity. And if you look at our portfolios, our portfolios have been tilted towards domestic businesses and even within domestic we have been looking at more cyclical themes rather than consumption-oriented themes as consumption trends continue to be weak. There is no pocket where there is too much value in the market at this point of time. However, it is to be evaluated on a relative basis and on a relative basis we do find more value in largecaps as compared to mid and small. So, wherever the mandate allows, we have tilted a little bit towards largecaps in recent times.So, within the pool of cyclicals, what sectors find highest allocation?Clearly, there are a couple of sectors which are likely to exhibit better earnings growth compared to the market average earnings growth even going forward, that has been the case for financial year 2024. But we do see a couple of these sectors continuing that trend even into financial year 2025, probably into financial year 2026 as well. So, auto, auto components, cement, these are some of the names that we like. We also like industrials. There has been a very-very strong order inflows that have been seen across the sector. We do believe that at some point of time, the execution will also pick up and margin should remain quite strong given that the commodity cycle is still benign. We also look at pharma. Pharma should also show reasonably strong earnings growth, better than market average earnings growth. So, these are some pockets where we think earnings growth will continue to remain quite strong. And hence, even though the valuations may be a little higher than comfortable levels in some cases, that may continue as long as earnings growth continues in this trajectory. Speaking of earnings growth, give us a sense as to where is it that you are expecting there to be a positive surprise on the upside and where is it that you believe that the disappointments will continue when it comes to earnings?This quarter is unlikely to be a very big quarter either in terms of positive surprises or negatives. In fact, this is one of the slowest earnings growth that you will see if you look at the last couple of quarters. So, this quarter we will see probably about 6% to 7% earnings growth on a year-on-year basis for Nifty basket. However, for the full year, financial year 2024, you will see still upwards of 20% earnings growth. Thanks to somewhat unfavourable base of last year, last quarter, we are unlikely to see big numbers in this earnings season. So, we may not see too many companies delivering very-very strong results or very-very muted set of numbers. But within that overall view, we also find IT services, for example, will remain muted. Even going forward, I think the volume momentum continues to be weak. The margins have not been great. There have been several verticals which are still showing a decline or very-very slow growth. So, this will continue to lag the overall market average earnings growth. Banking and financial services though could be more or less in line with market average earnings growth; however, there are near-term headwinds in terms of how credit growth is going to pick up given that the deposit growth has been difficult for most banks. While on a valuation basis maybe this sector looks better than some of the other sectors, but in the very near term it is unlikely that it will outperform. So, it has been a very-very lacklustre kind of an earnings season when you compare it to previous few quarters, I would say. Why are banks not chipping in? If the economy is doing well, if credit growth is decent, inflation fears are behind us, banks are massively underperforming. Why is that?One to begin with, I think before this entire bull run started they were one of the leaders of the market and their valuations were at very-very high levels compared to their own historical valuation levels and suddenly we have seen this segment delivering earnings growth which is lower than the market earnings growth which has not happened for many years and at the same time we have had many of the other cyclical themes which were not showing any earnings growth, suddenly coming back and delivering better than market earnings growth. So, suddenly, the incremental money has definitely moved towards some of these cyclical and manufacturing sectors where there is a reasonable degree of confidence on the earnings growth moving forward. However, as I said, while the near-term headwinds still continue for banking and financials, we do believe that if at all there is any segment where valuations are around the COVID levels or pre-COVID levels, then the largecap banking names are the only ones to really look at. So, in case there is volatility in the market, probably this sector will outperform. However, if market continues to move up, then probably it may not outperform, that is our view at this point of time. Let us look at the importance of election and the importance of budget. From market standpoint, election is more like a no-show. But what about budget?Budget definitely will be focused on more because this is the third term, if at all the consensus expectations come true, then that will be a kind of a focus from the government in terms of how to accelerate the growth and how to build on the platform that has been built in the last 10 years, etc. I think all eyes will be in terms of what kind of an impetus will be there on infrastructure growth, what kind of an impetus will be on manufacturing growth, and how jobs will be created in the country because ultimately that is going to drive consumption growth as well. All of these factors will be focused. And our sense is if the same government were to come back, some of the policies that we have seen in the past 10 years will only get accelerated and to that extent it should be positive for most domestic-focused businesses.You earlier talked about maintaining a tilt towards largecaps as opposed to what the broader market has been doing. Do you believe it is still overheated because, we were just calculating irrespective of that March shake-off that we got within the mid and smallcaps specifically, we are again back to just about a percent, two odd percent away from the all-time peak.Definitely. The valuations have been more or less similar. If you just forget those couple of weeks of downside volatility that we saw, market is back to earlier levels. Midcaps are still trading at a valuation which is almost like 20-25% premium to their historical averages. When I talk about historical averages in case of midcaps, I am talking only from, let us say, in 2017 or 2018 when the recategorisation happened and there is a clear sense in terms of how money has moved into these segments. So, even on the basis of those elevated valuations, we are already higher by 20-25%. There is no room for earnings disappointments here. And if you look at smallcaps, the case is even more elevated in terms of valuations. It is almost like 45% premium to long-term averages. So, that is where we believe that earnings delivery is going to be very-very crucial for smallcaps and midcaps. If there is any disappointment, then market may not have the room to really take those disappointments. However, in case of largecaps, while valuations are higher, they are not so high. With some shallow correction or some sideways market for the next couple of months those valuations can get adjusted to historical averages, so that is where our comfort is more on largecaps at this point.

Continuing his attack on the Congress and on the occassion of Hanuman Jayanti, Prime Minister Narendra Modi on Tuesday said that listening to Hanuman Chalisa also becomes crime under Congress rule. Addressing a rally in Rajasthan's Tonk, Modi trailed guns on the Congress party and its governance in the state. "In the rule of Congress, even listening to Hanuman Chalisa becomes a crime. Rajasthan has been its sufferer and for the first time on Ram Navami this time, Shobha Yatra procession was taken out in Rajasthan. In a state like Rajasthan where people chant Ram-Ram, Congress banned Ram Navami," Modi said. It becomes difficult to follow one's faith under them, he added. He also reiterated his claim of Congress' aim to distribute wealth among selected people."The truth is that when the Congress was in power, they wanted to give separate reservation to their special vote bank by breaking into the reservation of Dalits and backward classes. Whereas the Constitution is completely against this," Modi said.He added, "Former PM Dr Manmohan Singh in his speech had said that Muslims have the first right on the country's resources. This was Manmohan Singh's statement. Congress's thinking has always been of appeasement and vote bank politics. As soon as the Congress government came to power at the Centre in 2004, its first task was to try to provide reservation to Muslims by reducing SC/ST reservations in Andhra Pradesh. This was a pilot project, which Congress wanted to try in the entire country. Between 2004 and 2010, Congress tried four times to implement Muslim reservations in Andhra Pradesh. However, due to legal hurdles and awareness of the Supreme Court, they could not fulfil his plans. In 2011, Congress tried to implement it across the country."The BJP leader noted that whenever the people here have been divided, enemies of country have taken advantage.Modi said, "Unity is Rajasthan's wealth. Whenever we have been divided the enemy has taken advantage of it. Even now efforts are going on to divide Rajasthan and its people and Rajasthan needs to be cautious of this. In these 10 years, you have seen what a stable and honest government can do for the development of the country." "People of Rajasthan know the importance of a safe nation and a strong government. Therefore, you all voted to form a strong BJP government in the years 2014 and 2019. You gave all 25 seats (in Rajasthan) to the BJP," he added.