Add GPT Healthcare Ltd For Target Rs. 161 By JM Financial Services Ltd
Mixed 2Q; expansion to weigh on near-term margins
GPT Healthcare reported a mixed performance in 2QFY26, with rev./EBITDA/PAT growing +13%/-3%/-28% YoY. The EBITDA margins contracted 304bps YoY to come in at 19.1%. The revenue growth was broad based, driven by ramp-up at the four key facilities. Though, the occupancy remained flat in Dum Dum and Howrah. The management is also exploring inorganic opportunities in tier-2 cities like Varanasi and Patna, though challenges persist in finding suitable acquisition targets. The recently commissioned Raipur unit contributed INR 99mn in revenue but reported an EBITDA loss of ~INR 40mn, weighing the entity margins down, with full-year losses projected at ~INR 100mn for FY26. The Jamshedpur unit is expected to launch by 3QFY27, although the company anticipates EBITDA losses of INR 40–50mn in the quarter of commissioning. Given the greater-than-anticipated losses at the Raipur unit and the uncertainty surrounding the Ranchi expansion, along with the expected impact of the Jamshedpur launch on FY27 EBITDA, we are revising our FY26/27/28 estimates downwards. We value the stock at 10x FY27E EBITDA, to arrive at a TP of INR 161 and rate the stock as ADD, in-line with our new rating system
* Expansion plans: The management mentioned 3QFY27 as the expected timeline for commissioning of the Jamshedpur unit, with expected EBITDA loss of INR 40-50mn in the quarter it gets commissioned in. The company is also exploring inorganic opportunities in tier-2 cities in eastern India (Varanasi, Patna, Cuttack). However, is facing difficulty finding quality targets. GPT remains open to greenfield too, with preference towards asset-light model but not bound by it.
* Raipur: The newly commissioned Raipur unit reported INR 99mn in revenue, with occupancy at 10% and ARPOB of INR 40,869. The entity booked EBITDA loss of INR 30mn in 2Q and INR 72mn in 1HFY26. The management has guided for INR 100mn EBITDA loss on annualised basis for FY26, with breakeven expected in 12-13 months post commissioning. The unit has started offering Renal transplants, Chemotherapy and Oncology Surgeries. Further, the unit has received license for conducting liver transplants.
* Salt Lake: The Salt lake facility reported INR 393mn in revenue for 1HFY26, with occupancy at 62% (vs. 58% in 1HFY25) and ARPOB of INR 41,062 (+4% YoY). GPT has conducted 700+ successful robotic surgeries at the site and expects changing case mix towards complex cases and increase in occupancy down the line.
* Agartala: The Agartala unit reported 1HFY26 revenue of INR 692mn, with occupancy at 53% (vs. 47% in 1HFY25) and ARPOB of INR 34,993 (+8% YoY). The unit is one of a kind hospital in Tripura. The hospital has started Radiation Oncology, completing over 700 procedure in 4 months ? Dum Dum: The Dum Dum hospital contribution for 1HFY26 was at INR 765mn, with occupancy coming in at 64% (vs. 70% in 1HFY25) and ARPOB at INR 42,033 (+2% YoY). The management anticipates numbers to improve in 2HFY26, as 1H was impacted due to offering realignment targeting ALOS reduction.
* Howrah: The Howrah unit reported INR 308mn revenue for 1HFY26, with occupancy at 42% (vs. 41% 1HFY25) and ARPOB at INR 34,822 (+8% YoY). The unit commenced robotic knee replacement surgery offering and has performed 34 such surgeries till 1HFY26.
* Valuation: We are revising our FY26/27/28 estimates downwards on account of – a. Greaterthan-anticipated losses at the Raipur unit; b. Uncertainty surrounding the Ranchi expansion; and c. Expected impact of the Jamshedpur launch on FY27 EBITDA. We value the stock at 10x FY27E EBITDA, to arrive at a TP of INR 161. Rating the stock as ADD, in-line with our new rating system.
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SEBI Registration Number is INM000010361
