Stock Analysis: Virinchi Ltd

Market Cap:  274.00 Cr.
Current Price:  91.10
52 weeks High / Low  153.50 / 79.90 

Virinchi Limited is a Hyderabad-based company. It is engaged in the information technology sector.

The company has expanded into the healthcare sector. It has set up a 600-bed super specialty hospital in Banjara Hills by making an investment of Rs 300 crore.The hallmark of the new facility of Virinchi Hospitals is customer centric technology applications, diagnostic facilities, molecular diagnostics and personalised medicine.

Vrinchi Hospital will have specialties in cardiac, ortho, nephro, neuro, emergency, cancer and transplantation. It will be equipped with several firsts in Indian healthcare industry such as 15,000 plus biomarker diagnostic lab, full spectrum radiology markers among other equipment.

There will be an insurance driven cashless hospital facility accessible to all sections of people. Differential pricing would be based on the type of room the patient uses.

Canara Bank and other lenders have given Virinchi Healthcare Private Limited Rs 70 crore. The remaining funds for the project were raised from internal sources.

Vrinchi Healthcare has employed 75 expert doctors, of whom about 30 are already on board. The total employment to be provided to paramedical and other supporting staff will be to the tune of 1,000.

Now going through the financials of the company, we can certainly see that its like a sitting duck at the moment trading extremely cheap with great potential

Few financials highlights 

Stock P/E: 7.58 
Dividend Yield: 0.00 % 
ROCE: 13.83 % 
ROE: 14.28 % 
Sales Growth (3Yrs): 36.40 % 
Change in promoter holding: 2.86 %
Change in promoter holding 3Years: 20.35 %

Company price in recent months has corrected by almost 30% making it an extremely lucrative investment.

Cash flow:

Lets first focus on the cash flow statement of the company in order for me to link the entire story. We can see that for a company which has a market cap of 274Cr, it has purchased fixed asset of almost its market cap in last 2yrs to expand its operation. This is indeed quite a substantial investment for a company of this size

 Quarterly result
We can see the effect of above investments in the increase in revenue and profit on a continuous basis in the company financials in last 4-5 quarters where it has consistently reported good numbers while share price hasn't reflected it yet due to the brutal fall in the small cap sectors recently.

We can also see that among all the peers it has it has one of the best ROE

Peers comparison

Overall i think its a very attractive investment but being small-cap its risky as an category. This company certainly shows the glow and with current P/E around 8 while recent promoter holding increase along with massive investments in fixed assets coupled with good financial performance, do you think the share price is trading cheap? i think yes

note: This is a educational website. I am not a SEBI registered advisor. My views on this company might be biased.