Sumit’s Portfolio

Portfolio Update: Initiated a Position in Yatharth Hospital

I wanted to share a portfolio update. After recently exiting Transteel, I’ve initiated a small position in Yatharth Hospital, which now accounts for 1.2% of my total portfolio.

Why Yatharth Hospital?

Yatharth Hospital is an emerging player in the healthcare sector, primarily serving the Delhi-NCR region. Here’s why I decided to take a position:

1. Financial Performance: Yatharth has delivered solid financial growth, with a 37% YoY increase in revenue and a 60% rise in profit in Q1 FY25. While these numbers are promising, it remains to be seen if the company can maintain this trajectory as it scales.
2. Expansion Plans: The company is expanding aggressively, recently adding a 200-bed hospital in Faridabad, with plans to reach nearly 3,000 beds by FY28. This expansion could drive significant growth, but it also brings execution risks, particularly in managing new facilities effectively.
3. Operational Metrics: Yatharth has shown improvements in key metrics like occupancy rates, now at 61%, and ARPOB, which has increased by 9% YoY. These are positive signs, but sustaining these improvements, especially during rapid expansion, could be a challenge.
4. Medical Tourism Potential: Yatharth is well-positioned to benefit from India’s growing medical tourism market. With facilities close to major international airports and competitive pricing for high-quality care, they could attract a significant number of international patients.
5. Valuation: Yatharth’s valuation appears reasonable compared to other hospitals in the sector. There’s potential for rerating if they can continue delivering strong results, but this hinges on their ability to manage growth and maintain profitability.

Risks to Consider: While Yatharth’s growth story is compelling, it’s not without risks. The healthcare sector is competitive, and rapid expansion could strain the company’s resources. Additionally, the success of their medical tourism strategy and the ability to manage regulatory changes will be key factors to watch.