Up 36% from IPO, SMIFS Predicts Another 60% Surge for Yatharth Hospital Share!

Domestic brokerage firm SMIFS is bullish on Yatharth Hospital and Trauma Care Services, citing increased occupancy and higher average revenue per occupied bed (ARPOB) as key growth drivers. The firm has maintained its ‘buy’ rating on the stock, setting a target price of ₹650, which suggests a 60% upside from its current price of ₹406.75 as of May 27, 2024.

According to SMIFS, the stock is attractively valued at 12.7 times its estimated FY26 EV/EBITDA. They believe Yatharth Hospital has strong growth prospects in its local market and can boost revenue without compromising return ratios, closing the valuation gap with its peers. The brokerage values the stock at 20 times earnings, arriving at the ₹650 target price.

Stock Performance

Since its IPO in August last year, where it was priced at ₹300, the stock has risen 36%. It reached an all-time high of ₹503.90 on February 28, 2024, but has since fallen over 19%. Despite this, it remains 34% above its 52-week low of ₹304, hit on its listing day, August 7, 2023.

In 2024, the stock has gained 8% year-to-date, showing positive returns in three out of the five months. It fell 8.4% in May but gained 6% in April. March saw a 10.6% drop, but the stock was up 24% in February and slightly positive in January with a 0.5% gain.

Financial and Operational Highlights

In Q4FY24, Yatharth Hospital’s consolidated net profit surged 121% year-on-year to ₹38.3 crore, compared to ₹17.3 crore in the same quarter last year. Revenue from operations increased 24% YoY to ₹177.8 crore, up from ₹143.8 crore in Q3 FY24. Sequentially, net profit grew 30% and revenue rose 7%.

Yatharth Tyagi, the whole-time director of Yatharth Hospital, described the past year as transformative, highlighting the hospital’s solidification as a premium super-specialty institution. The hospital expanded its organ transplant program to include international patients for liver transplants and opened a new radiation oncology department.

The company also began operations at its newly acquired hospital in Faridabad, enhancing its presence in the Delhi NCR region. This acquisition aligns with its strategy to expand in North India, Tyagi said.

SMIFS noted that Yatharth Hospital’s performance in the March quarter met operational expectations, with profit after tax (PAT) exceeding estimates due to a lower tax outgo linked to the Faridabad Hospital acquisition. Occupancy is expected to rise from 54% in FY24 to 64% in FY26, and ARPOB is projected to grow at a 6.3% CAGR from FY24 to FY26, driven by a better case mix and inpatient growth. The strong growth in oncology and transplant services has improved the case mix, with internal medicine’s share dropping to 21% in Q4 FY24 from 28-30% for the full year. The new radiation oncology department has positively impacted ARPOB, and further increases are expected as volumes grow.