Yatharth Hospitals: Up 61% from IPO price, 6 key reasons why SMIFS sees another 36% upside in the stock
₹658. SMIFS is optimistic about Yatharth for several reasons - 1) It offers quality healthcare at affordable prices; 2) It's expanding into under-penetrated markets like Noida; 3) The focus on enhancing therapy offerings, including the addition of a radiation and oncology block, is expected to improve the Average Revenue per Occupied Bed (ARPOB); 4) Its lean cost structure, with limited dependence on star doctors, is poised to boost EBITDA margins. Yatharth adopts a single large hospital model, constructing 400-500-bed hospitals, which brings operating leverage benefits.
As occupancy rates rise, operating leverage is expected to lead to higher margins, believes SMIFS. It forecasts an EBITDA Compound Annual Growth Rate (CAGR) of 21 percent from FY24E to FY26E. Yatharth Hospitals operates in North India with a network of four hospitals (Noida, Noida Extension, Greater Noida, and Jhansi-Orchha), totaling 1405 beds as of December 2023.
In February 2024, it acquired a hospital in Faridabad, set to begin operations in Q1FY25, aiming to double its bed capacity to 2800 beds within the next five years. The stock has risen 34 percent in 2024 so far. Just in February, it has gained 28 percent, positive in both the months of 2024.
Currently trading at ₹483.85, it has jumped 61 percent from its IPO price of ₹300. The IPO was open for subscription between July 26 and July 28 last year at a price band of ₹285 to ₹300 per equity share. The issue consisted of a fresh issuance of shares for ₹490 crore and an offer by the promoters Vimla, Prem Narayan, and Neena Tyagi to sell 65.51 lakh equity shares.
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