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Healthy Q4; Strategic expansion to sustain growth

Global Health Ltd. (Medanta) delivered a 15% YoY topline growth in 4QFY25, aided by consistent volume growth throughout the network. The revenue, EBITDA and Adj. PAT (oneoff INR 0.5bn merger cost) grew 15%/25%/9% YoY (in line with the expectations). EBITDA margin was 24.1% (+195bps YoY). The overall growth was led by developing hospital, which grew 24% YoY during the quarter. It was primarily on account of uptick in new patients at the Lucknow and Patna facilities. Lucknow operations have now stabilized and Patna saw high growth numbers. The mature hospitals grew a moderate 8% YoY on a large base, with a slight dip in occupancy 62% (vs 63% Q4FY25). The year ended with a ~3,000 bed capacity across the network, with plans of adding ~1,000 beds in the next 2 years and another ~2,000 beds announced till FY29/30. The company has earmarked INR 4bn towards the growth needs. The Noida and Ranchi O&M facilities will see commissioning in FY26; while the Mumbai, South Delhi, Pitampura and Guwahati units are expected to take 3 years. In our view, Medanta enjoys a strong brand equity, which coupled with the precise targetting of upcoming Medical hubs, positions it for a strong growth period ahead. We expect the Revenue & EBITDA to grow at a CAGR of 15% and 19% over FY25-28, respectively. Thus, we maintain BUY on the stock with an updated TP of INR 1,536.

* Key metrics: ARPOBs were largely flat for FY25 (INR 62.7k) and Q4 (INR 63.6k) due to increased patient flow from government schemes. However, revenue growth was supported by increased patient volumes. The IPD grew by 12%/15% YoY and OPD grew by 10%/13% YoY during FY25/Q4. Average occupied bed days increased 12% YoY with the occupancy of approximately 61% on increased bed capacity the quarter. During the quarter, revenue from international patients increased 17% YoY to INR 557mn. For FY, 82% of payer mix came from the cash TPA market across the group. In Lucknow and Patna markets, this number may be even closer to 90%.

* Mature Hospitals: During the quarter, the mature hospitals contributed INR 6.5bn to topline, a 8% YoY growth. The EBITDA stood at INR 1.7bn, up 13% YoY, with a margin expansion to 25.8% from 24.7% in 4QFY25. The average occupied bed days increased by 2%, representing an occupancy of 62%. ARPOB was INR 69.6k, a 6% YoY growth due to change in the case mix.

* Developing Hospitals: The topline stood at INR 2.8bn, a 24% YoY growth. Growth primarily due to uptick in the new patients at Patna and Lucknow. EBITDA of INR 871mn during the quarter, a 40% YoY growth with an improved EBITDA margin of 31%. The average occupied bed days increased by 36% year-on-year, leading to improved occupancy of 60% on increased bed capacity. ARPOB for 4QFY25 was INR 53,818 vs 57,696 for 4QFY24. Lucknow operations have stabilized, the management remains committed to further strengthening clinical capabilities. In line with this, Medanta has added 7 new directors and ~20 senior clinicians across various specialties. The company also commissioned Da Vinci XI surgical robot and a new cath lab. Additionally, the facility was enrolled with the Ayushman Bharat, CGHS and other schemes. The company added ~600 & ~320 census beds in Lucknow and Patna during FY25, respectively. The year saw strong financial performance in Patna despite the lower realizations and with extremely high revenue and EBITDA growth numbers.

* FY25 expansion: The company undertook CAPEX of INR 6,449mn during FY25, of which INR 1,367mn was towards the Mumbai hospital, while the remaining was spent towards expanding bed capacity, upgrading technology and Noida construction. Medanta added 219 new beds across network, a 7.8% YoY growth in capacity. This includes - 49 bed for mother and child at Gurugram; 112 beds in Patna; and 58 beds in Lucknow. The company also launched Medanta clinics at Golf Course Road in Gurgaon and at Ranchi.

* Future expansion: Medanta has a strong pipeline to add ~1,000 beds over the next 2 years and another ~2,000 beds by FY29/30. The company earmarked the total capital outlay of ~INR 4bn for this expansion, along with a maintenance CapEx of about INR 4.5bn. The majority of this investment is expected to be back-ended, and the projects will be funded through a combination of internal approvals and the debt financing. The company announced this year 3 large greenfield hospitals in high growth regions – Mumbai, Pitampura, and most recently, Guwahati. Medanta also signed an O&M agreement this year to operate a 110-bed hospital with advanced OT and critical care facilities in Ranchi, expected to operationalize in Q1FY '26. This is in addition to existing 200-bed hospital in Ranchi. Noida 550-bed greenfield hospital is in full swing, expected to be operational in Q2FY '26.

* Financial Highlights: - Revenue grew 15%YoY to INR 9.3bn (in line); - EBITDA came in at INR 2.2bn, up 25%YoY (in line); - EBITDA margin were at 24.1%, expanded 195bps YoY; - Reported PAT stood at INR 1bn, -20% YoY (miss); - Adj. PAT at INR 1.4bn, up 9% YoY. Adjusted for merger stamp duty (in line).

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