Buy Artemis Medicare Services Ltd for Target Rs. 325 by Choice Institutional Equities
Capacity expansion propels high-growth runway: ARTMSL is set to more than double its bed capacity, from ~700 to ~2,000, while reinforcing its industry-leading international patient revenues and steadily improving its payor mix. In our projection till FY28, we have not included the fund raise of INR 700Cr and South Delhi facility, (operational in FY29). We expect robust growth of Revenue/EBITDA/PAT CAGR of 26.1%/28.9%/31.3% over FY25–28E.
View and valuation: We value the company on 18x EV/EBITDA on an Avg of FY27–28E, implying a PE multiple of 38.7x/27.3x at FY27E EPS/FY28E EPS. Therefore, we maintain the target of INR 325 and ‘BUY’ rating on the stock
Revenue in line with estimate but misses on the margin front
* Revenue came in at INR 2.7 Bn (vs. CIE estimate: INR 2.8 Bn), up 17.2% YoY and flat on QoQ
* Highest-ever ARPOB at INR 84,100, up 10% YoY and 3.5% QoQ; occupancy came at 62% vs Q3FY25 at 60.4%
* EBITDA came in at INR 0.4 Bn (vs. CIE estimate: INR 0.5 Bn), up by 19% YoY and down 12% QoQ. EBITDA margin came in at 16.4% (vs. CIE estimate of 18.3%), improved by 24bps YoY and contracted by 206bps QoQ
* PAT came in at INR 0.2 Bn (vs. CIE estimate: INR 0.3 Bn), up 19.2% YoY and down 18.2% QoQ, with a PAT margin of 9.0% (vs. 8.9% in Q3FY25)
Fund raise of INR 700Cr: The Board of ARTMSL has approved a fund raise of up to INR 700Cr, to be deployed toward the development of new hospitals across both organic and inorganic expansion initiatives. Post the transaction, the promoters will continue to retain a majority stake in the company, with the proposed 15–20% dilution being broadly distributed across investors. The transaction remains subject to requisite approvals and final documentation
Efficient scale-up, strong earnings trajectory: ARTMSL is at the cusp of a structural growth phase, underpinned by an articulated and well-funded capacity expansion roadmap. The company plans to scale up bed capacity, from 700 beds at present to over 2,000 beds by FY29, driven by the commissioning of the Raipur hospital in FY27, the 650-bed South Delhi quaternary hospital and incremental bed additions (120 beds) at Gurugram. By FY28E, total operational beds are expected to reach ~1,000 with an occupancy of ~65% and ARPOB of INR 88,490 (for the flagship facility).
International patient focus drive superior case-mix: ARTMSL’s strategic emphasis on high-acuity quaternary care, including organ transplants, oncology, cardiac sciences and advanced robotics, creates a differentiated positioning in the Delhi-NCR healthcare market. This is increasingly reflected in its improving case mix, rising ARPOB and growing contribution from complex procedures. The international patient segment, which already contributes 30–34% of revenues, is expected to continue to outpace domestic growth. With government-led tailwinds supporting medical value travel and ARTMSL expanding capabilities in ultra-complex procedures, the company is well-placed to deepen its moat.
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