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Motilal Oswal Report
Global Health Ltd. missed our earnings estimate for Q4 FY24, largely due to subdued performance at Lucknow hospital. This was partly offset by improved occupancy/superior margins in mature hospitals segment.
We cut our earnings estimates by 7%/6% for FY25/FY26 to factor in a gradual pickup in utilization of beds in developing hospitals, higher opex for bed additions, and reduced operating leverage. We value Medanta at 35 times 12 months forward enterprise value/Ebitda to arrive at a target price of Rs 1,620.
Medanta has delivered a four-year CAGR of 17%/33%/59% in revenue/ Ebitda/PAT over FY20-24. It ended FY24 with 25% YoY earnings growth.
Medanta continues to add beds at existing sites (Lucknow/Patna/Gurgaon) as well as new sites (Noida/Indore/South Delhi). Earnings growth is largely driven by an increasing number of patients seeking treatment and a moderate increase in realization per patient.
This provides robust visibility for earnings growth (22% CAGR over FY24-26). Hence, we maintain Buy.
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