Recent ramp up in RTPCR likely to help Thyrocare continue its strong sales growth

Having learnt the lessons from the previous two Covid waves, the health ministry and states have become proactive in gearing up to combat the new variant- Omnicron. In a review meeting held by the health ministry, states were told to ramp up testing and intensify physical surveillance of home-quarantined international passengers. Maharashtra government on Tuesday issued stringent guidelines for air travel for both international and domestic travellers.

While uncertainty again looms over the market sentiment, Pharma and allied health sectors are once again in the spotlight. Thyrocare had an exceptionally good quarter that ended on September,30.

Key highlights of covid driven revenue and profitability metrics are:  

• Clocked highest revenue in Q2FY22, mainly driven by the B2G, business with covid RTPCR testing for NHM, MCGM, Goa.

• EBITDA also increased 44.25% YoY to Rs 89.29 crore in Q2FY22 from Rs 61.90 crore a year ago.

• Contribution of B2G (Government) in total reported revenue of 40% and contribution of covid in total reported revenue of 33%.

• 2.13 million covid RTPCR tests were processed in the current quarter is the highest compared to any other earlier quarters
   

The improved profitability was largely on account of reduction in the cost of reagents/consumables for covid RTPCR tests, volume benefits in sourcing/aggregating these samples at source and significant savings in the logistics cost apart from other administration costs in servicing this business segment.

The shares of the diagnostic leader are trading at a TTM PE multiple of 32.78 as against the industry multiple of 87.18. The company has delivered strong double-digit ROE and ROCE consistently. Last three years ROE stood at around 23% while ROCE at around 35%.

The shares of Thyrocare are trading at Rs 1086.75 with a loss of 1.70 per cent at 01.55 pm today.