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In Q2FY25, Yatharth Hospitals delivered results below our expectations. Revenue reached INR 2,178
mn, with a growth of 27.1% YoY and 2.8% QoQ driven by improved occupancy and ARPOB. EBITDA
grew by 19.9% YoY and 1.8% QoQ to INR 546 mn, with a margin of 25.1%, which contracted by
152bps YoY and 25bps QoQ. RPAT showed growth of 12.1% YoY and 1.9% QoQ, reaching INR 310 mn.
Occupancy was 60% compared to 57% last year, and ARPOB rose by 11.2% YoY and flat on QoQ to
INR 30,641. The Noida Extension Hospital recorded the highest ARPOB at INR 38,136 (+17% YoY),
followed by Greater Noida at INR 33,827 (+22.3% YoY).

* Expansion plan & roadmap ahead: The upcoming hospitals in Delhi (+300 beds) and Faridabad
(+400 beds) to acquire a 60% stake, which will be among the leading hospital chains in North India,
in terms of bed strength and will strengthen Yatharth Hospitals’ presence in the market of Delhi.
The operation of these hospitals is expected by Q1FY26. In the Model Town Hospital, Yatharth will
spend INR 60-70cr on the upgradation of infrastructure and medical equipment and the ARPOB will
be more than the current ARPOB of Noida facilities because of its presence in the huge residential
area in Delhi and will also deploy super-specialty since the start of the facility. Bed capacity to be
expanded by 200 and 250 beds at Greater Noida & Noida Extension in the next 30-36 months
respectively. Over the next 3 years, the company expects to add 450 beds (brownfield) across
2 facilities as part of its organic expansion plans. By FY28, the organization aims to double its bed
count to 3,000 through organic growth and strategic acquisitions.

* Change in specialty mix driving the ARPOB: During the quarter, ARPOB stood at INR 30,641,reflecting an 11.2% YoY and flat QoQ. This growth was primarily driven by a shift towards higher-
end specialized mix, wherein Oncology increases 4x, contributing 11% to the consolidated revenuesand 20% to Noida Extension revenue. The company introduced a new radiation pipeline across the
Noida Extension, Greater Noida, and the Greater Noida Hospital, which significantly boosted
oncology revenue. The company is focusing on further increasing ARPOB by adjusting the case mix
and expanding robotic surgery, and it anticipates that this growth will continue soon.

* Margin performance: The EBITDA margin during the quarter contracted by 152bps YoY and 25bps
QoQ to 25.1% due to an increase in employee cost. Going forward, due to the expansion plan the
company expects margin to remain in the range of 25.5-26% for the coming years.

* Outlook and Valuation: Yatharth’s growth will be fueled by the ramp-up of the new facility,
operationalization of 2 newly acquired facilities, ongoing capital expenditure that will double the
bed count over the next three years, increasing the share of international patients, and shifting the
payor mix towards cash payments. Projections for FY24-FY27E indicate robust revenue growth, with
a CAGR of 42.4% in revenue, 40.5% in EBITDA, and 43% in PAT. We have introduced FY27E and
valued the stock on Sep-FY27E EV/EBITDA multiple of 14x, resulting in a target price of INR 740 with
a BUY rating on the stock.

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