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Robust Growth in Revenue: Consolidated revenue witnessed a robust 21% YoY growth, attributed to higher patient volumes and increased realization at the Gurugram unit. Both mature and developing units displayed significant revenue growth of 17% and 33% YoY, driven by increased in-patient volume and enhanced realization. Developing hospitals' revenue share rose from 29% in Q3FY23 to 32% in the current quarter. International patient revenue experienced a 6% YoY increase to Rs. 473 million, fueled by higher volumes and realizations. The OPD Pharmacy business exhibited steady growth, with revenue rising by 28% YoY to Rs. 287 million in Q3 FY24.

Expansion Plans: Medanta is making significant progress in its expansion plans, with the Noida hospital superstructure reaching 82% completion and expected to commence operations by the end of FY25. The company aims to add 140-250 beds in Lucknow and approximately 30-40 beds in Patna by the end of FY24. In Medanta, Gurgaon, a floor is being converted into a day care unit for medical oncology chemotherapy procedures, and an additional 50 beds are being added to the mother and child unit. Furthermore, Medanta plans to establish a 400-bed super specialty hospital in South Delhi through the SPV "GHL Hospital Ltd," a joint venture with DLF. This expansion will enhance Medanta's presence and increase its bed count to around 2,400 in the NCR region.

Outlook & Valuation: We maintain our positive view on MEDANTA due to 1) Operating leverage due to the specialized doctor-led model, 2) ROCE improvement over FY23-26E, 3) Focus on underserved markets, 4) a Strong brand identity, 5) Expanding into a new segment Medanta Labs. We expect Medant’s revenue/EBITDA/ARPOB to grow at 21.3%/28.8%/33.6% CAGR over FY23-26E and the ROCE expansion of 220bps over FY23-26E. The company is into the capex cycle and we expect the margin to see some pressure in the FY25-27E period when the Noida facility operation starts. We value the stock on PE multiple of 47x on FY26E EPS of INR 29 with a target price of INR 1,362 per share. Due to the marginal upside of 0.9%, we maintain our rating of NEUTRAL on the company.

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