India Market Open| Narayana Health And Auto In Focus| NDTV Profit
- Hospital Chain #NarayanaHealth to get into healthcare insurance
- Is the 2-wheeler industry going through a change?
Samina Nalwala and Tamanna Inamdar discuss what the day ahead looks like, on 'India Market Open'. #NDTVProfitLive
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- Is the 2-wheeler industry going through a change?
Samina Nalwala and Tamanna Inamdar discuss what the day ahead looks like, on 'India Market Open'. #NDTVProfitLive
_______________________________________________________
For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia
Visit NDTV Profit for more news: https://www.ndtvprofit.com/
Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports
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Transcript
00:00 health insurance space?
00:03 Why not? The thing that most patients complain about
00:07 is the cost of the surgery and we spent the last 20 years
00:11 doing everything we can to bring in efficiencies and reduce the cost but
00:15 at the end of the day you take something that costs 10 lakh rupees you make it
00:18 two lakh rupees you make it 200 rupees it's not
00:21 something anyone's happy to pay because health expenses are always
00:25 unexpected and you never feel happy about paying it
00:28 but insurance is an expense that everyone is willing to pay
00:31 monthly and so this is the only way we feel that we can reduce the cost for our
00:35 customers by offering it in such a way that you're just paying small amounts
00:38 every month and we take care of everything else.
00:41 It's a tough space to be in. There are five standalone
00:45 insurers, you will be the sixth. Let's start with the plan to begin this.
00:51 When will you start? What will the rollout look like?
00:56 Optimistically we want to start by Q4. We would start with a pilot program
01:01 all in Karnataka. We will start in Bangalore and Mysore
01:04 with two sets of offerings which are targeted more towards the middle class
01:08 and lower middle class and the idea for us is to provide what we
01:12 call integrated care which is not just surgeries because anyone can do that
01:16 but for us to be able to offer preventative care to offer checkups
01:20 medicines outpatient benefits that is something that will make this very
01:24 different from what traditionally people would buy online.
01:27 I was reading an interview with Dr. Devi Shetty and
01:30 he also talked about the differentiator will be
01:33 that you won't have an exclusionary policy on
01:37 pre-existing diseases. Can you elaborate on that
01:40 and if you do that then how will this be a profitable business?
01:44 Well at this point profit is almost the last thing on our mind. The most
01:48 important thing for us is to prove to ourselves that this is something we can
01:51 do. More health, less insurance. If you run it
01:54 as an insurance company obviously you're going to do things like
01:57 deny people with pre-existing conditions find any reason to
02:01 deny a claim but we are in the healthcare business and we want to offer
02:04 healthcare to all our customers and we have a belief that even with
02:07 someone who has a surgery, who has diabetes, who has a chronic
02:11 condition that condition can be managed. Now it may be more expensive it may
02:15 require a lot more work but that's what we as a hospital
02:18 organization know how to do and so if we're able to price it appropriately we
02:22 believe that even people with pre-existing conditions can be
02:25 insured and taken care over long periods of time.
02:30 You know coming to why it's such a tough business your
02:33 penetration I believe is about of the sector is about one percent
02:38 odd of the population. It makes sense for everyone to have a health insurance
02:43 and you know instead of being stuck with a big bill at the end of it
02:47 India has some of the highest out-of-pocket expense rates in the world
02:51 how are you going to break that and as a new player how are you going to break
02:55 that? See in any forum that I go to and I ask
03:00 large groups of people are you happy with the health insurance offering that
03:03 you have and it's very rare that you find people that are thrilled
03:06 with the way it is currently structured. There are teething trolleys there is a
03:11 way in which things are structured right now that doesn't generate a lot of
03:13 satisfaction with people who have insurance. So how we're
03:18 trying to break that is one to make something that people love that
03:21 is absolutely enjoyable that provides comprehensive care and so
03:26 that people get used to the idea that yes
03:27 insurance is something I should go for rather than what happens right now where
03:32 people are just playing dice where you just say okay forget if it
03:35 happens to me I'll go to the hospital and pay.
03:37 If we can break that mindset and get sufficient people interested in the idea
03:40 of insurance that we do something that is of great value and more and more
03:44 people will take it up but right now it's just not
03:47 something people feel that they have to have.
03:51 And how will you compete with current players? Will you have lower premiums or
03:55 more competitive premiums or a better tie up with your own chain
03:59 of hospitals? How is this a complementary business and how will you compete?
04:04 We're not looking to compete on price this is something that by design
04:08 will take and hold up and a more complicated set of people
04:12 so this will cost more but what we're going to do is that this will offer a
04:16 lot more with tie-ups with our hospital and our
04:19 clinics and a lot of online offerings we will
04:21 manage the whole experience a lot better than is currently being done. It will
04:25 operate at a lot smaller scale and we're starting out in Karnataka for
04:29 that precise reason because we can control a lot the variables there so we
04:32 want to compete on the experience we want to
04:34 compete on how good you feel about having insurance and that you want to
04:38 keep investing in this again and again. Viren, you said that profits are the last
04:43 thing on your mind and I understand that as a
04:46 as a you know a societal need this is huge and I'm glad you guys are doing it
04:51 but you are a listed company your shareholders are going to wonder
04:56 if this is going to make sense for your core business which is doing
05:00 pretty well which is the hospital chain business.
05:03 Can you address that? See it does not need to make a lot of money because an
05:08 insurance company that makes a lot of money is one also that is not generating
05:12 a lot of happy customers. You don't need to lose money at scale
05:16 so we're not looking to expand across the country we're not looking to blow up a
05:19 huge amount of money this is something that we are trying out in one state
05:22 in our network and we will control a lot of the variables and we run it in such
05:26 way that generates a lot of customer satisfaction we figure out
05:29 monetization data and by the way even make most of the health insurance
05:33 companies aren't making money on their book either
05:35 at the scale that they have so clearly more policies isn't always the ticket
05:39 for making a lot of money. Let's try something different. Yeah the
05:43 idea is not to lose money. All right let me just get your take on
05:47 the core business the hospital business can you share your outlook
05:51 for you know the close of FY24 and going into FY25 where do you see the
05:57 expansion coming in the capex coming in? Most of the capex is
06:02 in our existing network we are investing in all our large
06:05 hospitals in Bangalore in Calcutta in refurbishing a lot of the old
06:09 infrastructure that we have in adding beds, cat labs,
06:12 radiation oncology both in Cayman and in India we're investing in the existing
06:16 network most of these will come online maybe not by this year but starting next
06:21 financial year and the next two years are going to be a
06:24 very intense build-out phase for us where we will be spending a lot of capex
06:28 towards upgrading and adding more infrastructure
06:31 to what we already have. It's a conservative approach isn't it
06:35 Viren? Why the hesitation to spread beyond
06:39 areas where you're already comfortable and well established? I just want to
06:42 understand the sort of business strategy and outlook.
06:46 We're pretty spread out as it is we're all across the country we're in Bangalore
06:49 Bombay Delhi we're in Ahmedabad Jaipur it's just that the
06:52 existing hospitals need a lot more love and attention
06:54 they do need a lot more beds they do need a lot more OTs and that's where
06:58 the most immediate need is whereas going after new geographies means you're
07:02 neglecting the older ones. A lot of analysts are looking at
07:08 the healthcare sector and this is from an investment point of view
07:11 as one of the shining sectors of this year some of the top picks
07:15 of this year. I want to understand your outlook in terms of what do you think
07:22 is changing and after the sort of spike that was seen
07:26 post-covid etc it's been a bit of a lull.
07:30 What is the sort of outlook that you have in terms of footfalls coming in and
07:34 inpatient versus outpatient? See as a country and as a people Indians
07:39 are least likely to go for treatment, least likely to take medicine, least
07:43 like even when they know they have a problem least likely to go after a doctor
07:46 to get their treatment done. So there is a huge amount of catch-up that is
07:50 required. Now what healthcare institutions like us
07:52 are trying to do is to reduce those barriers
07:54 to getting treatment by addressing on the cost side or addressing on the
07:58 convenience side or addressing it on the comfort that you have with the doctor
08:02 side. So a lot of what you're seeing as the
08:05 post-covid catch-up pent-up demand there is some amount of pent-up demand
08:09 but there is a huge secular shift towards as people start living longer
08:13 as they start realizing that there are healthcare options that can cure what
08:16 ails them and allow them to live longer and by
08:18 living longer they can earn more money it becomes a very easy calculus to make.
08:22 So the long-term trends is that people will access
08:26 more healthcare for a very long period of time to come.
08:29 Now the onus for us in what we do in response to that is to provide a
08:33 superlative healthcare experience without burdening people's pocketbooks
08:37 too much and that we find is that going after
08:39 insurance and addressing the affordability angle
08:42 is a better way to address that rather than just blindly adding more beds all
08:45 over the place. Yeah just one last question Viren.
08:50 Government push for a larger healthcare coverage has grown exponentially in the
08:56 last few years and in fact this is something that all
09:00 government state and center want to push. There are subsidies. I
09:04 want to understand how it plays into the hospital business.
09:08 Does it help in terms of coverage or is it a hindrance in terms of
09:14 the parameters of the conditions that government run schemes set for you?
09:20 So the government Ayushman programs address the people that are earning
09:24 less than a dollar a day. So these are people at the absolute bottom of the
09:27 pyramid and these are patients who otherwise have no
09:30 options available. So for them this is an absolute lifesaver. Now every
09:35 hospital will have certain amount of excess
09:37 capacity where you may not make money treating
09:40 these sorts of patients but on a marginal cost basis. If you say that fine
09:44 at least it pays for the medicine in certain specialties you can fill up
09:47 certain excess capacity with those patients and so for us
09:50 about 20 percent of our beds are kept normally for
09:53 patients coming under these government programs and that's good enough.
09:57 Now it is not the panacea for the healthcare sector because like I said
10:01 the reimbursement isn't great. It would actually be better served if
10:04 the government funding went to a government institution but anyway for
10:06 now it's going to the private sector but
10:09 overall the larger game for us is addressing affordability through
10:13 insurance and that we feel will be a much better
10:15 way of having more and more people get healthy
10:18 rather than current system which is paying out of pocket.
10:21 Absolutely. Thank you so much. Very pleasure speaking with you
10:24 on the show this morning and the big takeaway there a foray into the health
10:29 insurance business with a very specific target audience
10:34 in mind. So that was an interesting conversation to have. We'll take a very
10:39 short break at this point but stay tuned when we come back we're talking about
10:42 the auto space and it's not just Bajaj Auto that's buzzing it's a lot more.
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13:46 Welcome back you're watching India Market Open. It's a pleasant morning on the
13:50 Lal Street. Lots of buying coming in across the board. The broader markets are
13:54 trading firm. The benchmark also keeping itself together this morning. One sector
13:59 that's in focus and has been rather than yesterday has been the auto pack. Of
14:03 course, this morning the story then the day belongs to Bajaj Auto for other
14:06 reasons but auto numbers is what we're all anticipating and looking at as we go
14:11 into earning season as well. Manish Raj, Singhania President, FADA and Aditya
14:16 Velkar, Senior Research Analyst, Metas and Auto Access Security joins in. Thank you
14:21 gentlemen for joining us this morning on NDTV Profit. Manish, I'll come with you,
14:26 I'll come to you first. How have you read the data in terms of numbers that you've
14:32 got in for December? What is the picture looking like? Are numbers improving? Are
14:37 sales improving for two-wheelers, passenger vehicles and commercial
14:41 vehicles or things are or the trend is slightly more subdued than expected?
14:45 So December has been a good month for the auto radio industry with registering an overall growth of almost 21% compared to last year.
14:53 With two-wheeler registering almost 27% and passenger car registering almost 3% growth.
14:59 So it has been a good calendar year end and primarily it was it contributed because of the price hike that was planned in the month of January.
15:13 After three years, almost three years, we consumers and the market saw the December end schemes coming in and since the dealer paid-up stocks were pretty high, that eventually leads to very good schemes for the consumer in the market.
15:27 So that also prompted the sales of vehicles and on top of that, first 15 days were the marriage season and the marriage season contributes greatly towards the sale of two-wheeler.
15:41 So that was another impetus and plus the rising MSP that the central government disburses to the farmers that has kind of you know reformed the rural economy.
15:55 So two-wheeler has been doing good. When we started this year, April to August, we were in a negative growth.
16:04 But with the start of festive season and end of December, we have seen a steady growth in the two-wheeler industry.
16:11 That shows that the entry-level two-wheeler as well as the rural economy has kind of started responding well in this last couple three, four months.
16:21 But the trend needs to be observed for you know confidently say that you know rural is out of distress and two-wheeler would continue this growth trend as we saw in the last month.
16:33 Manish, I think that is critical right. So while December has been a good month, you had the festive buying, lots of factors that could have contributed to this.
16:41 Rural like you said is coming back as well. If I ask you in terms of expectation and trend, what are you picking up from dealers?
16:48 Does it seem like this trend could continue and back of inquiries, maybe bookings potentially and also discounts.
16:56 Is that also been a key trigger why sales have done so well and where do inventories really stand for most of the dealers?
17:04 Yeah, so I will go segment wise in this. In passenger car, the inventory levels are very high.
17:10 We are almost at 55-58 days per day and which amounts to almost 6.5 lakh or 7 lakh vehicles in stock with the dealers.
17:18 So that's a huge stock. Whenever dealers have stocks and we are opening the 23 models with this stock level in the next year.
17:28 So obviously consumer schemes will definitely go up. Not only dealers will come forward, the OEMs will also contribute in consumer schemes.
17:35 That's a good time for the consumer. During the last 2-3 years, we saw heavy booking period, waiting period going up to 2 years.
17:43 Now that has come down substantially on an average to 3-4 months and that also only on very select variants.
17:51 So a good time for consumer coming in. Availability is very much there and plus these schemes have also started coming in.
18:01 In the 2-wheeler space, stock levels are at a very comfortable level. Sales have grown.
18:07 I think 2-wheeler OEMs are managing their dealers better there and we confidently feel that 2-wheeler industry will continue to see some growth in the last quarter.
18:22 Because the last quarter of the financial year is always good for the auto industry.
18:26 Sometimes it turns out to be the best quarter because of depreciation benefits and lot of marriage season coming in from 15th of January.
18:35 Lot of festivals also coming in. So I think last quarter will also end up pretty well with good discount for consumers especially in PV segment.
18:46 You want to comment on this one. It seems like from all the data that has been rolling in, there has been a structural change potentially that's underway in the 2-wheeler segment.
18:56 100cc is not as attractive anymore. Gen Z doesn't enjoy riding bikes like they did.
19:02 The shift clearly is towards either luxury in that sense or bikes like Royal Enfield potentially or the new offerings that are coming from the Hero and the Bajaj stable.
19:13 How do you play the 2-wheeler space? Do you also in terms of preference like Hero and Bajaj or are you going with an Aisha on back of Royal Enfield?
19:23 So is that your question? Yes, Aditya that's for you.
19:30 Good morning. So that's right. We are witnessing premiumization trend in 2-wheelers also.
19:38 And as you rightly pointed out, even Hero is launching vehicles in higher cc segments.
19:44 So that trend is visible. So for Bajaj Auto if you see, they have managed a good amount of market share in 125cc+ segment at 30%+
19:56 and even Hero Motor Corp, they have launched in collaboration with Harley Davidson,
20:03 they have bookings of Charisma and HD 440 that they are also picking up well.
20:09 And they all plan to ramp up these executive and these premium vehicles by this year end to 10,000 units per month.
20:20 So that trend is visible. But at the same time, we are optimistic that there might be some green shoots in the rural recovery also,
20:28 which will benefit Hero Motor Corp. So the kind of weakness which we have seen in the rural recovery,
20:35 in the rural demand and which has impacted the entry-level vehicles, that may drag out.
20:41 But we have to continuously monitor that trend. So that is one green shoot and monitorable which we will have to see in the coming months.
20:50 Right. Aditya, in that case, I want to also quickly get a view from you in Bajaj Auto since you're fortunately in the studios with us today.
20:59 With a big massive buyback, what does it mean for shareholders of Bajaj Auto?
21:04 And also in pecking order, your top picks in the auto pack, we also saw numbers from JLR, which look pretty promising.
21:12 Yes, so Bajaj has declared a buyback at rupees 10,000 per share, which is at a premium to the current market price.
21:18 So that is one positive. And buyback is always an efficient way of giving back to the shareholders.
21:29 So Bajaj Auto also has a tailwind that if the exports, they almost contribute 50% to exports.
21:37 And if the exports market recovers, especially Nigeria and Argentina, then that kind of tailwind is also there.
21:44 Their three-wheeler portfolio has done well. So part of it is already reflected in the stock price.
21:50 So I think today's move is more reflective of the buyback announcement, which yesterday they have came up with.
21:58 As far as the pecking order in two-wheelers is concerned, I think we like all the three two-wheelers.
22:04 Each two-wheeler has its own characteristics. So Bajaj, as I said, the exports recovery is impending and Bajaj will be a beneficiary if that happens.
22:12 Same for TVS. TVS IQ is doing quite well and it is now second number in terms of the market share in electric vehicle two-wheelers.
22:21 And TVS exports also can pick up, if Bajaj pick up and TVS can also pick up. So the export tailwind is for both these companies.
22:30 Only concern for TVS is that the valuations are slightly gone ahead.
22:37 The stock is now trading at almost 38X its 12-month forward PE ratio.
22:42 But still if the exports pick up, then TVS can also have further tailwinds and even it can rise from the current level.
22:50 Hero Motor Corp, as I said, it has a tailwind of rural recovery, which has not yet fully broad-based rural recovery.
23:00 It can definitely drive further re-rating in Hero Motor Corp.
23:04 For Aicher, we are not that bullish as compared to these three stocks because the exports have not picked up for Aicher as was expected.
23:13 But the kind of motorcycles they have brought in, the Himalayan 450 and all, they have a good stable in their product portfolio.
23:22 We have to wait and see how the competitors like HD, Harley Davidson, 440 and Tramp impacts Aicher.
23:29 That is one monitorable. So as of now, we are not very bullish on Aicher.
23:33 But for other three two-wheeler stocks, we have a buy rating and we continue to monitor them for further re-rating.
23:41 Thank you. Thank you, Manish. Thank you, Aditya.
23:44 We would have loved to chat with you longer, but we are sort of short of time.
23:47 Hopefully, we will catch you both soon.
23:49 With that, it's a wrap on India Market Open. Thanks for watching.
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