Medanta operator Global Health Ltd. surpassed Q2 FY24 earnings estimates, primarily driven by a notable increase in the number of patients treated across its hospitals and a moderate rise in average revenue per occupied bed for the quarter.
Medanta also exhibited healthy growth in international patient revenue, implying enhanced acceptability outside India as well.
We raise our earnings estimate by 13% each for FY24/FY25, factoring in-
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faster utilisation of beds in developing hospitals,
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better operational efficiency across mature as well as developing hospitals, and
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the advantage of introducing new indications at the Gurgaon facility.
We also raise 12 months enterprise value/Ebitda multiple to 26 times (from 23 times earlier) to factor in faster scale-up of newer hospitals and better visibility to add new sites (Noida/South Delhi/Indore). Accordingly, we arrive at a price target of Rs 1,050.
Interestingly, Medanta is on path to achieve our expected FY25 financial performance in FY24 itself. Further, the institution is actively expanding its capacity, having not only increased bed numbers, but also adding clinical resources (added 160/500 doctors/nurses over past one year) to meet the growing demand across various sites and incorporate new medical indications. We reiterate our ‘Buy’ rating on the stock.