Buy Artemis Medicare Services Ltd for the Target Rs.325 by Choice Institutional Equities
Capacity expansion propels high-growth runway:
ARTMSL is poised to more than double its bed capacity, from 700 to ~2,000, by FY29, while further strengthening its leadership in international patient revenues, alongside improving ARPOB, payor mix and case mix. Our FY29 projections do not factor in the proposed INR 7,000 Mn fundraise. We expect Revenue/EBITDA/PAT to deliver a strong CAGR growth of 29.4%/29.9%/34.7% over FY26–29E.
View and valuation:
We value the company on 18x EV/EBITDA on FY28E, implying a PE multiple of 42.4x/31.4x at FY27E EPS/FY28E EPS. Therefore, we maintain the target price of INR 325 and ‘BUY’ rating on the stock.
Revenue in line with estimate, achieved highest-ever EBITDA margin
* Revenue came in at INR 2.8 Bn (vs. CIE estimate: INR 2.8 Bn), up 16.4% YoY and 2.5% QoQ.
* Highest-ever ARPOB at INR 84,571, up 2.1% YoY and 0.6% QoQ; occupancy came at 64.6% vs Q4FY25 at 60.8%
* EBITDA came in at INR 0.5 Bn (vs. CIE estimate: INR 0.5 Bn), up by 43.7% YoY and 15.8% QoQ. Highest-ever EBITDA margin at 18.5% (vs. CIE estimate of 16.8%), significantly improving by 352 bps YoY and 211 bps QoQ.
* PAT came in at INR 0.3 Bn (vs. CIE estimate: INR 0.3 Bn), up 32.1% YoY and 19.6% QoQ, with a PAT margin of 10.8% (vs. 9.6% in Q4FY25)
Efficient scale-up, strong earnings trajectory and fund raise of INR 7,000Mn:
ARTMSL is targeting a massive capacity leap, from its current 700 beds to ~2,000 beds by FY29. This includes expanding the Gurugram flagship by adding ~100 beds, growing South Delhi from the initially planned 450 beds up to over 650 beds, launching over 300-bed Raipur super-specialty hospital (starting with 200 beds by the end of Q1FY27) and adding additional greenfield and brownfield projects currently in the pipeline. The board has also approved INR 7,000 Mn fundraise, via QIP, to be deployed towards the development of new hospitals across both, organic and inorganic, expansion initiatives and the promoters will continue to retain a majority stake in the company.
International patient focus drives superior case-mix:
ARTMSL’s strategic focus on high-acuity quaternary care, spanning organ transplants, oncology, cardiac sciences and advanced robotics has created a differentiated position in the Delhi-NCR healthcare market. This is evident in its improving case mix, rising ARPOB and increasing share of complex procedures. The international patient segment, contributing ~31% of revenues, is also expected to continue growing faster than the domestic business.
Capital-efficient expansion model with trust-land strategy:
ARTMSL is deploying a highly capital-efficient hospital model using trust-owned land so as to sharply reduce per-bed costs. The 650-bed South Delhi (VIMHANS) facility is estimated at INR 70–80 lakhs per bed, the 300-bed Raipur hospital cost just INR ~1,100 Mn under a lease-plus-revenue-share model and Gurugram’s 100-bed expansion is expected at only INR 40–50 lakhs per bed.
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