Yatharth Hospital and Trauma Care Services has demonstrated impressive growth, surging over 90% from its IPO price of ₹300 since its listing in August last year. The company’s IPO, held from July 26-28, 2023, was highly successful, achieving a remarkable 37.28 times subscription, reflecting strong investor interest in this small-cap stock.
Despite the stock’s significant rise, Phillip Capital has placed a ‘buy’ recommendation on Yatharth Hospital, setting a target price of ₹827. This forecast suggests a substantial upside potential of over 44% from its current trading levels. The brokerage emphasized Yatharth’s status as an emerging mid-market multi-specialty healthcare provider with considerable room for expansion across all fronts.
Yatharth operates as a multi-specialty tertiary healthcare provider in Northern India. The company has ambitious plans to increase its bed capacity from the current 1,605 to over 2,800 beds. This expansion is expected to drive substantial business growth. Additionally, Phillip Capital forecasts growth in Average Revenue Per Occupied Bed (ARPOB) due to an improved service offering and patient mix, further increasing the company’s topline. The strategic location of their facilities near densely populated areas provides a competitive edge.
Growth Projections
Forward-looking estimates are optimistic, with expectations for the company’s revenue, EBITDA, and PAT projected to grow at compound annual growth rates (CAGRs) of 29%, 30%, and 33%, respectively, over the financial years 2024 to 2027.
Stock Price Performance
The stock has experienced a 51% increase over the past year and has performed well year-to-date, marking a noteworthy 8.5% jump in September alone. This pattern of ascent has continued for four consecutive months, with gains of 14% in August, 10% in July, and a modest 0.5% in June. After a 7% drop in May and mixed performance earlier in the year, the stock seems to be on a strong upward trajectory.
As of now, the stock is just 4.5% shy of its all-time high of ₹599.65, reached recently on September 25. Notably, Yatharth has soared 66.5% from its 52-week low of ₹344 recorded in October last year, indicating substantial recovery and investor confidence.
Investment Insights
Phillip Capital’s report highlights Yatharth’s strategic entry into underserved markets, which positions the company to capture higher inpatient volumes compared to its counterparts. As surgical costs rise in prominent hubs like Gurugram and NCR, patient traffic is likely to shift towards Noida, where Yatharth can offer better rates—approximately 10% savings for patients on average. The company has steadily increased its bed count, and with a targeted growth plan, it aims to expand from 250 beds initially to around 2,800 in the next 3-4 years.
Occupancy rates are also improving, escalating from 50% in FY22 to 61% in Q1FY25, with a target of further increasing this rate to 65% by FY27. Phillip Capital anticipates that new bed additions and enhanced occupancy could contribute approximately ₹500 crore to the company’s revenue. Furthermore, the ARPOB has risen from ₹23,000 in FY22 to around ₹30,000 in Q1FY25, driven by a strategic shift towards high-value specialties.
From a financial standpoint, Yatharth has registered solid topline growth, reflecting a 43% CAGR from FY21 to FY24, bolstered by rising occupancy rates and ARPOB. Analysts predict that this growth trend will continue, fueled by an improved service mix and economies of scale that enhance EBITDA margins and boost return ratios to 17% ROE and 19% ROCE by FY27.
With a robust growth strategy focused on expanding bed capacity and improving ARPOB, Yatharth Hospital is well-positioned for further gains in the healthcare sector. Phillip Capital’s optimistic outlook, grounded in strong fundamentals and a strategic geographic location, points to significant upside potential for Yatharth Hospital, with projected growth in revenue, EBITDA, and profitability through FY27. As a result, the hospital stock remains an attractive investment opportunity within the mid-market healthcare segment.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to consult certified experts before making any investment decisions.
