Shares of Yatharth Hospital and Trauma Care Services have experienced a remarkable surge of over 90% since the company's initial public offering (IPO) last August, which priced the shares at ₹300. This surge has garnered attention from investors and analysts alike, particularly given the strong market demand evidenced by a 37.28 times subscription rate during the IPO, which ran from July 26-28, 2023.

Strong Performance and Analyst Recommendations

Despite the impressive rise in stock price, brokerage firm Phillip Capital has initiated coverage on Yatharth Hospital with a 'buy' recommendation and a target price of ₹827. This projection suggests a potential upside of over 44% from the current trading levels. Phillip Capital notes that Yatharth is establishing itself as a prominent player in the mid-market multi-specialty healthcare sector, with considerable room for expansion.

In their report, Phillip Capital emphasized that Yatharth is strategically positioned to capitalize on its geographic advantages, which include proximity to high population density areas in northern India. The company plans to increase its current bed capacity from 1,605 to over 2,800 beds, which they expect will lead to substantial growth in in-patient volumes.

Revenue Growth Projections

Phillip Capital projects that Yatharth Hospital's Revenue/EBITDA/PAT will grow at impressive compound annual growth rates (CAGRs) of 29%, 30%, and 33%, respectively, over the fiscal years 2024 to 2027. This robust growth is expected to be driven by two key factors: an increase in bed capacity and an improvement in Average Revenue Per Occupied Bed (ARPOB).

As noted in their analysis, the ARPOB is forecasted to increase from ₹23,000 in FY22 to around ₹30,000 by Q1FY25. This increase is attributed to a shift towards higher-value specialties and an improved patient mix, which is likely to contribute to a further 5-7% CAGR through FY27. Collectively, Phillip Capital estimates that these factors could add approximately ₹500 crore to the company's topline revenue.

Stock Performance and Market Sentiment

In addition to the impressive overall performance since its IPO, Yatharth Hospital's stock has climbed 51% over the past year. It has also shown a positive trend year-to-date, gaining 8.5% in September alone, marking the fourth consecutive month of gains. While the stock recently approached its record high of ₹599.65 on September 25, it remains approximately 66.5% above its 52-week low of ₹344 recorded in October of the previous year.

Conclusion

Yatharth Hospital’s strong growth trajectory, combined with its strategic initiatives to enhance bed capacity and improve operational efficiency, positions it favorably in the healthcare market. Phillip Capital’s optimistic outlook highlights the company's potential for significant revenue and profitability growth in the coming years, making Yatharth Hospital a compelling investment opportunity in the mid-market healthcare sector.

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