Buy Global Health Ltd for the Target Rs.1,670 by Motilal Oswal Financial Services Ltd
Volume-led outperformance continues Faster ramp-up reinforces growth
* Global Health (Medanta) delivered a better-than-expected 1QFY27 financial performance, with 12%/13% beat on revenue/EBITDA. 1Q earnings came in slightly below our expectations due to higher depreciation, lower other income and a higher tax rate.
* Overall performance was largely driven by volume of IPD/OPD patients. ARPOB growth was moderate, driven by a better case mix.
* Specifically, Lucknow/Patna hospitals’ performance was encouraging, primarily led by robust volume growth. Lucknow hospital, which was started with 200 beds in Nov’19, now has 778 beds, and the company continues to scale up bed addition considering the strong demand in the region.
* Patna was also started with 100 beds in Nov’21 and now has 600 beds, with 131 added in FY26 and 49 to be added in FY27.
* Consistent with its strategy of greenfield set-up, Medanta has scaled up its new facility at Noida, with opex loss reducing to just INR49 in 1QFY27 and close to achieving EBITDA breakeven in much less time compared to a conventional greenfield hospital.
* We raise our estimates by 1%/3% for FY27/FY28, factoring in a faster rampup of its Noida facility and superior execution in Lucknow/Patna. We value Medanta at 28x 12-month forward EV/EBITDA to arrive at a TP of INR1,670.
* We expect a CAGR of 15%/27%/33% in revenue/EBITDA/PAT for Medanta to reach INR58b/INR15b/INR10b over FY26-28. In addition to a healthy scaleup of existing hospitals, Medanta continues to invest in greenfield projects in new locations like Guwahati, Mumbai, Delhi, and Varanasi. Considering the phasing of the projects, we believe internal accruals, surplus cash and comfortable financial leverage would be sufficient to fund ongoing projects. Maintain BUY.
Strong operating momentum across mature and developing hospitals
* In 1QFY27, sales grew 26.5% YoY to INR13b (vs our est: INR11.7b).
* EBITDA margin remained stable at 22%YoY (our est: 21.8%).
* EBITDA grew 26.3% YoY to INR2.9b (vs our est: INR2.5b).
* Adj. PAT grew 9.2% YoY to INR1.6b (our est. INR1.6b), impacted by a higher tax rate than expectation.
* Revenue of Cluster 1 hospitals (Gurgaon, Indore, Ranchi; 61% of total revenue) grew 10.1% YoY to INR7.7b. EBITDA stood at INR1.9b with margins at 24.1% (+70bp YoY).
* Revenue of Cluster 2 hospitals (Lucknow, Patna, Noida; 39% of total revenue) grew 54.8% YoY to INR5b. EBITDA stood at INR1.3b. Excl. Noida, Lucknow/Patna hospitals’ revenue/EBITDA stood at INR4.1b/INR1.3b with 32% EBITDA margin.
* Noida hospital revenue came in at INR855m, with opex loss of INR49m (vs. loss of INR236m in 4QFY26).
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
