Buy Yatharth Hospitals; target of Rs 1350: Choice Institutional Equities

Fresh updates from the financial markets indicate that Choice Institutional Equities's report on Yatharth Hospitals

Following YATHARTH's strategic partnership with Advent International, we interacted with the former’s management to gain deeper insights into the firm's next phase of expansion, capital allocation strategy and M&A roadmap. We discussed firm’s plans with Mr. Yatharth Tyagi, Director, and Mr. Ashutosh Kumar Jha – Group Chief, Strategy, M&A & IR. The management reiterated confidence in sustaining 30%+ organic expansion, with Advent-led acquisitions anticipated to provide incremental topline and earnings over and above the existing expansion trajectory. The firm stays focussed on adding INR 2,000 Mn of EBITDA through strategic acquisitions, offering visibility for over 3x business expansion over the next three years while sustaining margins at ~24%. In our estimates, we have factored in an additional ~1,200 beds by FY29 from the Advent investment, taking total capacity to ~6,000 beds by FY29.

While maintaining our valuation multiple of 20x on Avg. of FY28-29E EV/EBITDA, we revise our target price to INR 1,350 (from INR 1,100) and maintain our ‘BUY’ rating on the stock.

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