Buy Jeena Sikho Lifecare Ltd for the Target Rs.900 by Choice Broking Ltd
A Monopoly Business Model -- Ayurveda as IPD (In-Patient Department):
JSLL has institutionalised at scale Ayurvedic in-patient treatment; a feat not many players have achieved. Following the rise in demand for tackling lifestyle diseases, such as diabetes and heart diseases, JSLL is positioned to dominate this blue ocean market, with robust government backing through integration of AYUSH.
Rapid Expansion Expected via a Zero-capex Plan:
JSLL plans to diversify its business model by partnering with Ayurveda colleges, which will bypass heavy capex and rapidly expand its network. India’s 600+ Ayurveda colleges, each with a ~100-bed capacity, will help expand rapidly. We project that JSLL will scale up its bed capacity to 5,000+ by FY28, with 4,000+ beds operational beds, achieving an occupancy rate of ~61% and an ARPOB exceeding INR 8,500.
OTC Business Segment to Scale Up Substantially for ~20% Overall Revenue:
At present, there are ~15 new products in the pipeline; we expect 12 of them will be launched by FY28, with the first one just launched (Pet Shuddhi Kit) priced at INR 960 (vs. competitors at INR 115--200), charging more than 5x than its competitors and making ~90% gross margin.
View and Valuation: Without additional investment, JSLL is expanding rapidly via Ayurveda colleges and plans to enter into the high-margin OTC business. With no debt on its books, we expect JSLL to deliver significant Revenue/EBITDA/PAT CAGR of 44.2%/57.9%/60.3% over FY25--28E.
Recommending JSLL with a BUY rating and target price of INR 900 with upside remaining 27.5%, by valuing the company on DCF, implying a PE multiple of 25.6/18.2 at FY27E EPS/FY28E EPS.
