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Strong growth outlook

Global Health (MEDANTA) is a leading tertiary care service provider with a strong brand name in North and East India. The company focuses on large format, super specialty hospital networks, which provides an edge. It operates 6 hospitals (in Gurugram, Indore, Ranchi, Lucknow, Patna and Noida) with a total bed capacity of ~3,737 and intends to add ~3,368 beds over the next 3-4 years. MEDANTA reported moderate EBITDA growth of 7% CAGR over FY24-26, due to issues at Lucknow unit and start-up losses related to Noida unit in FY26. With Lucknow unit issues largely resolved and ramp-up in Noida visible, EBITDA is expected to clock ~24% CAGR over FY26-29E. Our FY27E/FY28E EBITDA estimates remain broadly unchanged. At CMP, the stock trades at 24x on FY28E and 21x on FY29E EV/EBITDA. We maintain ‘BUY’ rating on MEDANTA with TP of INR 1,750/share, valuing at 28x EV/EBITDA on Sep’FY28E.

Impressive ramp-up of new greenfield assets:

Both Lucknow and Patna units have ramped up rapidly, achieving breakeven in their first full operating year (Lucknow in FY21, Patna in FY23). Noida is also all set to reach EBITDA breakeven in a year, demonstrating MEDANTA’s strong brand and execution capabilities.

Noida to emerge as next growth engine:

Commercialized in Sep’25 with 300 beds in Phase 1, Noida unit has expanded to 433 operational beds by Q1FY27, with scope to reach 550 beds as occupancy ramps up. Positioned to tap the large, underpenetrated NCR market, the unit has its key infrastructure in place, with growth now expected to be largely volume and payer-mix led with limited incremental capex, supported by the completion of key insurance and PSU empanelments. We expect EBITDA breakeven in Q2FY27, with EBITDA estimated at INR865mn in FY28E and INR1.4bn in FY29E, which will position Noida unit as a key medium-term earnings driver, alongside Lucknow and Patna

Lucknow + Patna units to deliver ~18% EBITDA growth over FY26-29E: Lucknow and Patna units together have delivered strong 27% EBITDA CAGR over FY23–26, demonstrating rapid ramp-up and improving operating leverage. On the expansion front, Lucknow will be adding 172 beds in H2FY27 (21 beds added in Q1FY27), while Patna plans to add 49 beds in Q4FY27, following addition of 131 beds in FY26. Together, the 2 units contributed to INR4.5bn EBITDA in FY26 (~48% of total). We expect 18%+ EBITDA CAGR over FY26–29E, supported by capacity additions at proven units, volume growth and operating leverage.

Aggressive ~3,368-bed expansion to support medium-term growth:

MEDANTA plans to add ~2,950 greenfield beds across South Delhi, Pitampura, Oshiwara, Guwahati and Varanasi over the next 3–4 years, taking total planned capacity additions (including brownfield) to ~3,368 beds. With most greenfield projects likely to commence operations from FY30, near-term growth remains focused on execution and brownfield ramp-up. The ~418-bed brownfield expansion across Indore Cancer unit, Lucknow, Noida and Patna is expected to turn EBITDA-accretive within 6–9 months, while Ranchi II should benefit from an oncology-led case-mix upgrade. Established demand and operating leverage across these assets are expected to provide a near-term earnings cushion ahead of the greenfield ramp-up.

Outlook and valuation:

We expect revenue to clock 16% CAGR over FY26-29E aided by new bed additions, increasing operational efficiency, and ramp-up of Noida unit. MEDANTA plans to commission ~3,368 beds (90% of the current capacity) over FY27-31E without straining its balance sheet. Overall, we expect EBITDA/PAT CAGR of 24%/ 23% over FY26-29E with healthy RoE/RoCE of 17%/19%. We value MEDANTA at 28x EV/EBITDA on Sep’FY28E and maintain ‘BUY’ rating with TP of INR 1,750/share.

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