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Margins to improve

JLHL’s Q1 consolidated EBITDA grew by 1% YoY to Rs 793mn; we est at INR 830mn. Adjusted for Dombivli unit loss; EBITDA growth was at 13% YoY. We expect base business growth to pick up as occupancy and margin improves acorss Pune and Indore unit. Its operational efficiency has been strong in the competitive markets of MMR. The company reported revenue/EBITDA CAGR of ~20% over FY23-26. Given its expansion plans, scale-up in occupancy and improving margins, growth momentum is expected to sustain over the medium term. We believe strategic greenfield expansions in densely populated micro-markets of western regions will drive sustainable growth. Our FY27E and FY28E EBITDA broadly remain unchanged. Overall, we see 17%/10% CAGR in EBITDA/PAT over FY26-28E. Maintain ‘BUY’ rating with a TP of Rs360/share, valuing at 26x EV/EBITDA based on FY28E EBITDA.

EBITDA miss; 13% YoY EBITDA growth Ex of Dombivli unit: JLHL Q1FY27 EBITDA increased 1% YoY to INR 793mn. OPM declined by 290bps YoY and 370bps QoQ to 19.3%. Newly operationalised 200 beds at new Dombivli unit in Q4 reported INR 95mn of EBITDA loss vs INR 94mn of EBITDA loss in Q4. Adj for Dombivli losses, EBITDA growth was at 13% YoY. Indore EBITDA reported de-growth of ~7% YoY impacted by higher pre-expansion operating costs, including team build-up and doctor hiring. Adjusted PAT stood at INR 375mn; down 15% YoY; due to higher depreciation and finance cost from Dombivli unit.

Strong ARPOB; YoY occupancy declines due to new bed addition: JLHL reported revenue growth of 16% YoY to INR4.1bn; in line with our est. ARPOB continues to improve by 9% YoY to INR 73.5k per day for Q1, driven by improvement case mix, insurance renegotiations and inflation-linked pricing. Occupancy for Q1 decreased by 50bps YoY to 59.6%, Ex of Dombivli unit it was at 61.7%; up 160bps YoY. IP & OP volumes increased by 7% YoY & 13% YoY respectively in Q1.

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