Medanta Gets Target Price Hike As Motilal Oswal Maintains 'Buy'

Motilal Oswal Financial Services Ltd. has increased the target price of Global Health Ltd., the operator of hospital chain Medanta. It had also maintained a 'buy' rating on the stock, citing strong growth potential driven by the company's aggressive capital expansion, improving hospital performance and talent acquisition.

The target price was raised to Rs 1,380 per share, reflecting an upside of 24.2% from its previous closing price on NSE.

As of the first quarter of fiscal 2025, Medanta had a bed capacity of around 3,440 across North and Central India. The company is focused on expanding its presence in Lucknow, Patna, and Noida, with plans to add around 500 more beds by the end of the financial year. In line with this growth, Medanta is actively recruiting clinical talent and investing in advanced technology and equipment, Motilal Oswal said in a note.

Medanta's long-term goal is to reach a capacity of over 5,000 beds, supported by its aggressive capex strategy, which includes expanding into new regions such as Mumbai-Oshiwara. The gradual recovery in hospitals in Lucknow and Patna, along with the operational costs of new beds, expansion into additional locations, and recruitment of skilled medical professionals, is expected to drive an 11% compound annual growth rate in sales, according to the brokerage.

Moreover, Ebitda margins are projected to improve by 120 basis points to 26.5% between fiscal 2024-26, said Motilal Oswal. The company's ability to leverage operating efficiencies, particularly in its developing hospitals, will be a key driver of future profitability. The brokerage expects Medanta's earnings to grow at an 18% CAGR over the next two years.

Medanta is aggressively expanding its capacity to meet future demand. The company had 2,823 beds as of first quarter and is targeting 3,373 beds by the end of fiscal 2025. The company plans to add 50 beds each in Gurugram and Lucknow, 150 beds in Patna and 300 beds in Noida during the fiscal.

Medanta's Noida expansion is expected to benefit from its proximity to residential areas and highways, which will drive initial occupancy to 30-35%. Over time, the facility's Average Revenue Per Occupied Bed is projected to reach Rs 55,000 to Rs 60,000, according to the brokerage.

Shares of the Medanta operator were trading 0.3% lower at 1,107.6 as of 11:00 a.m., paring losses from the intraday low of 1,088.75, or almost 2% lower. The NSE Nifty 50 was trading 0.12% higher.

The stock has gained 14.98% year-to-date and 58.63% in the past 12 months. Total traded volume so far in the day stood at 0.33 times its 30-day average. The relative strength index was at 58.19.

Five out of the 11 analysts tracking Global Health have a 'buy' rating on the stock, three suggest a 'hold' and three have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 13.3%.