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Muted quarter, long-term growth intact

upiter’s 4QFY25 Revenue/EBITDA/PAT grew 12.5%/25.7%/-0.9% YoY to INR 3.3bn/783mn/449mn; and was -5%/-4%/-20% vs JMFe and -3%/-3%/-17% vs street consensus. Topline growth for 4QFY25 was aided by YoY ARPOB growth of ~10%; with ARPOB being INR 65,453 for the quarter. Underperformance on PAT is predominantly because of higher depreciation due to the on-going expansion. The quarter saw addition of 78 beds in the Indore unit and initiation of brownfield expansion in the Thane unit. We believe Indore’s scale-up and Pune’s improving occupancy would be key growth drivers in the near-term. The Dombivli Hospital is on track for 1QFY27 launch. The new Pune facility and Mira road facilities are expected to be commissioned in CY28 and CY29, respectively. We believe that these greenfield additions provide longer term runway for growth and significant value creation for investors. Supported by strong double digit growth (20%/21%/22% Rev/EB/PAT CAGR over FY25-28), superior EBITDA/occupied bed (INR 5.2mn) and strong cashflow generation (INR 1.9bn FCFF over next 3 years), we value Jupiter at 27x EV/EB on Jun’27 EBITDA to arrive at TP of INR 1,851, implying 30.2% upside. Maintain BUY.

* Key Metrics: ARPOB grew 10% YoY to INR 65,453 for the quarter. Thane and Pune are mature units and ARPOB growth for the same is likely to be at inflation rate going forward. The management is of the view that Indore has additional growth lever of case mix optimization and hence can deliver higher than inflation ARPOB growth for another year. Thane had stable volume during the quarter, with Pune & Indore showing slight growth. Occupancy for 4QFY25 at standalone units being – 71.1% for Thane, 61.1% for Pune, 42.1% for Indore (lower than FY25).

* Thane Unit – plans to add another floor: The management perceives that the current occupancy level of 72% on annual bassis falls in the peak range of 70%-75%, scope to further increase the same is limited. The Thane unit has received municipality approval for additional floor, subject to other clearances. The construction is currently being delayed because of environmental committee being not active in the area. The newer beds are likely to expand unit’s operating margins. During the quarter, the unit decommissioned 22 bed economy ward and strategically reconfigured certain areas to create 2 OTs, place 2nd MRI machine, 2nd Cardiac cath lab, expand chemo suites from 14 to 22 beds and create a new OPD cluster.

* Indore Unit – 78 additional beds commissioned: Jupiter added 2 floors to the unit resulting in 78 additional bed which were commissioned on 1st Jan 2025. The company also added 11 ICU beds which are ready for commissioning. The same will be operationalized depending upon the demand. The company will evaluate further expansion of the unit once it reaches 60-65%. The occupancy for Q4FY25 fell to 42.1% owing to addition of the new 78 beds. The unit also raised INR 2.5bn in debt to repay the loan taken from the listed entity, the unit is now being able to generate sufficient cash to serve the debt.

* Pune: The management believes that there is scope for upward movement of 5-10% in occupancy from current 65% annual occupancy in the existing unit. The land parcel for new unit is on 10 year lease with no annual increment and option to buy the land pocket post 3rd year.

* Expansion Strategy: The management maintains focus on Western India for the near to mid-term future. Future units are likely to follow the hitherto “full service flagship Hub” business model. Though the company has a preference for greenfield expansion, it is open to acquisitions. Quality of asset and cost of acquisition are two key parameters for evaluation of any opportunity. The company has secured an INR 3.5bn loan sanction, of which INR 750mn has been availed. The cost of carrying this loan is less than 1%. Firm is confident that the current debt levels and internal accruals will take care of future growth.

* Greenfield traction: Dombivli hospital is on track for Q1FY27 commissiong. Phase 1 of Dombivle is expected to have 250 beds. The new pune hospital is at activation stage with construction expected to start post monsoon season. Land has been acquired for Mira Road unit and the company is at the moment seeking approvals, architectural drawings too will start soon for the same.

* Key Financials:

* Revenue /EBITDA/ PAT for the quarter were INR 3.3bn/783mn/449mn growing 13%/26%/-1% YoY; were -5%/-4%/-20% vs JMFe and -3%/-3%/-17% vs street consensus;

* Gross Margins come in at 81.3% (vs 81.7% JMFe);

* EBITDA margins at 24.0% (vs 23.8% JMFe, 23.9% consensus); YoY margin expansion due to operating leverage partially offset by higher than anticipate gross cost;

* PAT Margin of of 13.7% (vs 16.4% JMFe, 16.2% Street). Underperformance in PAT on account of higher than anticipated Interest and Depreciation, as well lower than expected other income.

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