Yatharth Hospitals premium capacity expansion supports revenue growth and margin potential

Investment View and Valuation

Choice Institutional Equities' August 11, 2026 Q1 FY27 result update characterises the investment case for Yatharth Hospitals as premium capacity-led revenue growth and margin expansion. The broker retained its BUY rating and target price of Rs 1,100 against a CMP of Rs 899, based on an unchanged 20x FY28E EV/EBITDA valuation multiple.

Choice expects revenue, EBITDA and PAT to compound at 37.4 per cent, 38.6 per cent and 38.7 per cent, respectively, over FY26 to FY29E. The broker did not change its FY27E or FY28E revenue, EBITDA, EBITDA-margin, adjusted PAT or EPS estimates.

Q1 FY27 Financial Performance

Yatharth Hospitals reported its highest-ever quarterly revenue in Q1 FY27. Revenue increased 52.3 per cent year-on-year and 15.0 per cent quarter-on-quarter to Rs 3,927 million, exceeding Choice Institutional Equities' estimate of Rs 3,546 million by 10.7 per cent. EBITDA rose 42.2 per cent year-on-year and 14.7 per cent quarter-on-quarter to Rs 917 million, 9.1 per cent above the broker estimate.

PAT margin contracted to 12.0 per cent from 16.3 per cent a year earlier.

Operating Performance and Hospital Mix

Operating indicators remained supportive. Group ARPOB rose 7.3 per cent year-on-year to an all-time high of Rs 34,758 per day, while occupancy was approximately 68 per cent. Inpatient revenue was Rs 3,411 million and outpatient revenue was Rs 489 million in Q1 FY27.

Adjusted EBITDA margin, excluding New Delhi and Faridabad Sector 20, was 28.1 per cent, according to management commentary cited by Choice. The Agra hospital generated Rs 90 million to Rs 100 million of monthly revenue and an EBITDA margin above 20 per cent in its first full quarter after integration. Greater Faridabad, New Delhi and Agra together contributed about 27 per cent of revenue in Q1 FY27.

Capacity Expansion and Growth Strategy

The growth thesis rests on an aggressive expansion programme. Management is targeting 5,000 beds, potentially earlier than the previously communicated three-year timeframe. Announced near-term capacity is expected to exceed 3,255 beds through the Gurugram hospital and brownfield additions in Noida and Noida Extension.

• Around 450 beds are planned across the Noida cluster, with parts expected to be operational within 15 to 19 months.
• Management is evaluating premium acquisitions in capital cities and nearby states, with one additional asset potentially anticipated in FY27.
• Expansion remains focused on NCR, Uttar Pradesh and other northern clusters, with Rajasthan and Haryana identified as potential new markets.

Management Outlook and Margin Potential

Management expects FY27 revenue growth to exceed FY26's 37 per cent growth, ARPOB growth of 9 to 10 per cent, and EBITDA margin of at least 20 per cent. A 24 per cent EBITDA margin is considered achievable despite additions and acquisitions.

• Newer hospitals are targeted to reach 15 to 20 per cent EBITDA margins within 15 to 18 months.
• Faridabad Sector 20 achieved EBITDA breakeven within nine months, while Agra has already exceeded a 20 per cent margin.
• Premium hospitals, higher-value specialties, international patients and lower government-payer dependence are expected to improve realisations.
• Newer assets are expected to target ARPOB of around Rs 50,000.
• Additional LINAC installations are planned to build oncology and advanced clinical capabilities.

Debt had increased to about Rs 300 crore following acquisitions, although management expects internal accruals and liquidity to fund expansion.

FY29E Financial Forecasts