Add Global Health Ltd for the Target Rs 1,500 by Emkay Global Financial Services Ltd
Global Health (Medanta) reported a robust quarter, with revenue growing 27% yoy and losses at the Noida unit narrowing sharply (EBITDA loss of Rs49mn vs Rs236 in 4Q). The developing cluster, excluding Noida, continued to be the growth driver, sustaining healthy momentum, with revenue/EBITDA growing 28%/40% yoy. With the bulk of insurance/PSU empanelments now complete, we expect the Noida unit to break even in 2QFY27 itself. While ramp-up at Noida continues to be superlative, given the lumpy nature of bed expansion (82% of planned bed adds to come online in FY29), we forecast 15% revenue CAGR over FY26-29. Factoring in the strong margin performance in the developing portfolio, we raise FY27E revenue/EBITDA by 5%/6%, while keeping FY28/29 estimates largely unchanged. While we remain constructive on the stock, current valuations (15% premium over sector average) limit further upside. We maintain our Jun-27E TP of Rs1,500, based on 26x FY28E pre-IndAS EV/EBITDA; retain ADD
All-round beat; Noida unit ramps up faster than expected
Medanta’s 1Q revenue grew 27% yoy to Rs11.6bn, on the back of OBD/ARPOB increasing 21%/6% yoy (beating our/street estimates by 10%/7%). Growth was driven by the developing portfolio, which saw OBD/ARPOB growth of 44%/9% yoy. The mature cluster too posted decent numbers, as its margin expanded 67bps yoy to 24.1%. Overall EBITDA also grew 26% yoy to Rs2.9bn, beating our/street estimates by 7%/10%, as Noida unit losses narrowed to Rs49mn in 1Q (4Q loss: Rs236mn). Adj PAT grew 14% yoy to Rs1.6bn, after adjusting for one-offs in the base quarter. Overall, ALOS improved 5% yoy to 2.87 days, driven by increased contribution from daycare procedures. International patient revenue mix rose in 1Q, despite geopolitical uncertainty from the West Asia crisis. Capex for 1QFY27 was Rs1.6bn
Earnings call highlights
1) Capex of Rs48.5bn outlined over the next 5 years, with the Guwahati unit expected to incur Rs9.7bn following the revised National Building Code (floor plate up from ~30- 40k sqft to ~60k sqft), lifting bed capacity to 650 and OTs from 13-14 to 28-30.
2) Key projects South Delhi: diaphragm wall completed, civil tender expected by end-Jun-26; Mumbai: environmental clearance pending; Indore Cancer Unit: 80-bed acquisition, operationalization targeted for 2Q/3QFY27.
3) Noida: 51 beds added in 1Q; major insurance players onboarded; focus on volume growth, with breakeven anticipated earlier than guidance (2QFY27).
4) The Noida unit currently operates at 30-40% occupancy despite additional beds commissioned.
5) The company operationalized additional OTs in the Gurugram unit in 1Q and plans to add 2 more in 2Q; it also plans to add 2-3 cath labs in the unit in 2Q.
6) Lucknow and Patna unit growth has been primarily driven by volumes, as the company has not implemented tariff revisions since inception.
7) The management added 70+ doctors, of whom 50+ were senior clinicians; Medanta has witnessed negligible attrition within its senior clinician pool.
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