Nuvama starts with 'Buy' on Yatharth Hospitals amid strong growth outlook

Yatharth Hospitals, an emerging healthcare player with a strong presence across North India, is gearing up for an accelerated growth phase as it expands aggressively across key micro markets, analysts said.

 

Domestic brokerage Nuvama projects a robust 30 per cent revenue and 31 per cent Ebitda compound annual growth rate (CAGR) over FY25-28E, underpinned by a strategic scale-up of bed capacity, from around 2,500 beds in FY26E to nearly 5,000 by FY30E. At current market prices, the stock trades at 17x FY27E EV/Ebitda. The brokerage has initiated coverage on Yatharth Hospitals stock with a ‘Buy’ rating and a target price of ₹920, valuing the company at ~20x H1FY28E EV/Ebitda.

 

 

The company has already delivered a strong 30 per cent revenue CAGR between FY22 and FY25, nearly doubling its bed base from 864 in FY21 to 1,605 in FY25. This momentum is set to continue as Yatharth adds nearly 60 per cent more beds in FY26 through acquisitions across Delhi, Faridabad and Agra. Over the next four years, it plans to further expand capacity to approximately 5,000 beds. Its three mature Noida hospitals are also expected to clock around 14 per cent annual growth as occupancy improves to 75 per cent and the specialty and payor mix is optimised, supporting a projected 7 per cent rise in ARPOB.

 

Despite healthy performance, Yatharth still operates below industry benchmarks in terms of ARPOB and occupancy, offering major upside potential. With FY25 ARPOB at ₹30,829 and occupancy at 61 per cent, the company aims to bridge the gap through entry into premium catchments like Delhi and Faridabad, the addition of high-end specialties such as oncology and transplants, and targeted hiring of marquee doctors.   ALSO READ | Elara bets on NTPC, Power Grid; sees hydro sector on strong long-term path 

Further, international patients are expected to rise from less than 5 per cent to nearly 10 per cent, aided by dedicated overseas offices and improved connectivity from the upcoming Jewar airport. A reduction in government-mix to 30 per cent from 37 per cent and recent CGHS price hikes are also set to boost profitability.

 

While margins may soften by about 100 basis points (bps) in FY26 due to aggressive expansion, they are likely to rebound to around 25 per cent by FY28 as new hospitals stabilise and mature facilities achieve full operating leverage. A robust balance sheet, with net cash of ₹370 crore and annual operating cash flow of ₹200 crore, places the company in a strong position to fund its planned capex of ₹1,500 crore over the next four years.

 

Yatharth is also taking steps to improve corporate governance, appointing BDO as statutory auditor, strengthening its board with key independent directors, and resolving property attachments by the Income Tax department. These measures add credibility to its long-term growth story.

 

Key risks, analysts said,  include a high government payor mix impacting working capital, any adverse ruling in the pending I-T dispute, intensifying competition in Noida and slower-than-expected ramp-up of new facilities.   

Disclaimer: Target price and stock outlook has been suggested by Nuvama. Views expressed are their own.