Strategic investments fuel strong positioning and growth momentum
Yatharth Hospitals reported a healthy revenue growth which was marginally below our estimates, while EBITDA was slightly below our expectations due to increased employee cost on recruiting leading doctors in the NCR region during Q2FY25. To strengthen its positioning and presence in key NCR region, company has recently acquired two hospitals one at Delhi and other at Faridabad. The company continues significant Capex investments, including robotics and advanced medical equipment across new hospitals. Yatharth’s revenues has witnessed growth of 27% YoY to Rs 2.2 bn driven by higher occupancy (60%), a 11% YoY rise in ARPOB, and a 30% YoY increase in inpatient volume during Q2FY25. EBITDA grew by 20% YoY to Rs 546 Mn, with an EBITDA margin of 25.1%. Going forward, with addition of new beds and higher than normal employee cost pertaining to doctor appointment to impact the EBITDA margins and expected to stay around 25.5% going forward. Despite bed addition occupancy is expected to remain high. We have introduced FY27E estimates and expects ARPOB to grow at a CAGR of 6% from FY24 to FY27E, driven by an improved case mix and inpatient growth. The company is on track to achieve close to Rs. 10 Bn in revenue for the fiscal year, supported by ongoing expansions and improvements in operational efficiencies. We assign 20x EV/EBITDA on Sept’26E EBITDA and arrive at a target price of Rs 790 per share, translating into an upside of ~30% and hence, we maintain Buy rating on the stock.
Outlook and Valuation: Currently, the stock is trading at comforting valuation on Sept’26E EV/EBITDA of 14.3x. Given Yatharth’s significant growth opportunities in its local market and its pledge to increase revenue without sacrificing return ratios, there’s a clear sign that the gap in valuation from peers is likely to wane in the coming times. We value the stock at 20x Sept’26 EBITDA and arrive at target price of Rs. 790 per share which offers upside of ~30%. BUY.
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Yatharth Hospital and Trauma Care Services Ltd – Q2FY25 Result Update – SMIFS Institutional Research
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