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Company Overview:

Incorporated in 2008, Yatharth Hospital and Trauma Care Services Ltd. (Yatharth) is a multi-care hospital chain. Yatharth Hospital operates through its super specialty hospitals situated in Delhi NCR - Noida, Greater Noida, and Noida Extension, Uttar Pradesh. The hospital located in Noida Extension Hospital has 450 beds and is one of the largest hospitals in the area. Further, they acquired a 305-bedded multi-specialty hospital in Orchha, Madhya Pradesh near Jhansi, which commenced operations in Apr’22; taking total bed capacity to 1405.

Objects and Details of the Issue:

The public issue consists of fresh Issue of Equity shares aggregating upto Rs 490 Cr and Offer for sale of Equity Shares aggregating upto Rs 197 Cr. Out of the fresh issue net proceeds, Rs 245 Cr will be utilized in repayment of debt; Rs 198 Cr will used to fund capex and further inorganic growth initiatives. Remaining of the proceeds will be utilized for general corporate purposes

Investment Rationale:

* One of the leading super-specialty hospital in Noida with diverse specialty and payer mix

* Introducing new specialties at existing hospitals leading to higher ARPOB

* Scaling through organic and inorganic manner in current markets

* Healthy Financials

Valuation and Recommendation:

Yatharth is one of the largest hospitals in Noida region. No. of occupied beds and ARPOB grew by 13% and 12% CAGR respectively over FY21-23; which led to a 51% CAGR growth in company’s revenue. EBITDA grew at a CAGR of 41% over the aforementioned period. India’s current healthcare expenditure is largely dominated by private expenditure. North India regions including Haryana and Uttar Pradesh have lower than average doctor and nurse density per 10,000 population. This is expected to improve going ahead, favouring company’s expansion plans. Yatharth’s recent acquisition of Jhansi-Orchha is aimed at further expanding into new geographies and to grow their presence into regional healthcare market. Company intends to focus on more advanced specialties; having high demand in respective markets and deliver a higher ARPOB. With high ROE and ROCE of 36% and 24.4% respectively, we believe Yatharth is being offered at a reasonable valuation of 20.9x FY23 EV/EBITDA as compared to its peers. With healthy financials along with growth potentials in Northern India, we recommend ‘SUBSCRIBE’ to the issue.

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SEBI Registration number is INH000001766

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