IGI Logo

In Q2FY25, Medanta's performance was above our expectations. Recorded highest-ever revenue of INR 9,566 mn, showing a growth of 13.3% YoY and 11.1% QoQ, driven by higher patient volumes, increase in bed occupied days, and improvements in realization. The ARPOB for matured hospitals grew by 6.2% YoY to INR 67,059, while for developing hospitals, it declined by 5.9% YoY to INR 53,724. Occupancy for developed hospitals came in at 67%, compared to 65% last year, whereas for developing hospitals, it was 60% versus 64% last year. Consolidated EBITDA increased by 7.3% YoY and 22.5% QoQ to INR 2,283mn. However, the EBITDA margin contracted by 135bps YoY but improved by 223bps QoQ to 23.9%. Consolidated ARPOB stood at INR 62,140, and grew by 1.9% YoY, due to changes in case mix and tariff increases in the matured hospitals. PAT grew by 4.5% YoY and 23.1% QoQ to INR 1,308mn.

* Medanta Expands in NCR: In Pitampura, New Delhi, Medanta recently signed an operations and management contract to run and oversee a cutting-edge, 750-bed super specialty hospital. Medanta and the Dr. Narayan Dutt Shirmali Foundation International Charitable Trust Society will work together to construct the hospital. The goal of building a top-notch healthcare delivery platform is strengthened by this expansion into the high growth densely populated micro markets of North West and West Delhi which also reaffirms the dedication to improving patient care by bringing in top-notch infrastructure and services. This hospital, to be will offer comprehensive world-class healthcare services, including multispecialty robotic surgeries, regenerative medicine, and a full spectrum of transplantservices.

* Investment in medical equipment and expansion: During the quarter, Medanta enrolled in the Ayushman Bharat and Deen Dayal health schemes and installed the Da Vinci Xi surgical robot at Medanta Lucknow, which will strengthen the city's capacity for complex care and offer radiation oncology and cardiac services to a larger patient base. The network's capacity was increased by 280 beds in H1FY25, including 50 beds in the Gurugram facility, 84 beds in Patna, and 150 beds in Lucknow. The focus is on ramping up the occupancy across these new bed additions. The Noida facility is anticipated to start operations in Q1FY26 with 300 beds. There was a delay in the Indore project due to litigation, and the company is exploring alternative opportunities in Indore.

* Developing hospitals: Increased patient volume is driving the Patna unit's continued success, which boosts revenue and profitability and increases its contribution to the growing hospital. In-patient volumes, revenue, and EBITDA all showed sequential growth, showing sequential growth at the Lucknow's facility.

* Outlook & Valuation: We maintain a neutral stance on MEDANTA due to anticipated margin pressures over the coming years brought on by continued expansion plans and no tariff increases for the current fiscal year. We have introduced FY27E and forecasted revenue and EBITDA to grow at CAGR of 15.4% and 16.3%, respectively, for FY24-27E. The company is in a capex phase, planning to invest INR 2800cr over the next 5 years, which may impact margins during FY25-27E. Based on these factors, we value the stock at 27x EV/EBITDA for Sep-FY27E, resulting in a target price of INR 1,146 and a HOLD rating on the stock.

For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131