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Can Religare Health Trust Benefit From India’s Growth?

Recent research suggests that the Indian economy could grow between 7% and 8% this year. This would make India one of the fastest-growing economies in the world.

The positive outlook for India follows the election of Prime Minister Narendra Modi, who is determined to reduce regulation and welcome foreign investments.

Currently, 30 companies listed on the Singapore market report revenues that are generated from India.

Some of those companies report negligible revenues from India. For instance, Wilmar International (SGX: F34) and Sembcorp Industries (SGX: U96) report less than 10% of their earnings from the country.

Sarine Technologies Limited (SGX: U77), a leader in diamond and gemstone manufacturing, generates more than 10% of its revenues from India. It is valued at just shy of S$1b. But with an earnings multiple of 37 and a price-to-book ratio of 9, it hardly would be hard to make a case for Sarine as a value stock.

Indian real-estate company Indiabulls Properties Investment Trust (SGX: F3EU) is worth S$360m. It has a price-to-book ratio of just 0.3. At first sight Indiabulls appears cheap. But whilst top-lines revenues have remained fairly constant, it has been unprofitable since 2013.

Religare Health Trust (SGX: RF1U) has a price-to-book that is more reasonable at 1.3. The business trust is yielding 7.1%. Religare runs clinics and hospitals in India. It was founded in 2011.

Last year the trust posted a doubling of revenue and swung from a loss of S$5.3m to a profit of S$41m. Cash flow from operations increased more than 10-fold. However, the current ratio stands at just 1.1.

Euphoria surrounding fast-growing economies push stock prices beyond value territory. This could render many companies unattractive from a value investor’s perspective. This seems to be case here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.