Yatharth Hospitals targets threefold growth through Advent-backed hospital acquisitions

Investment View and Strategic Partnership

Choice Equity Broking maintains its BUY rating on Yatharth Hospitals and has raised its target price to Rs 1,350 from Rs 1,100. The September 30, 2026 management-meet note identifies the strategic partnership with Advent International as a catalyst for the company’s next growth phase.

Choice believes the partnership will strengthen Yatharth Hospitals’ ability to pursue larger hospital-chain acquisitions rather than standalone assets. It is also expected to provide capital support, operational value creation and enhanced governance.

Acquisition Strategy and Growth Outlook

Management remains confident of sustaining organic growth of more than 30 per cent, with revenue and earnings from Advent-led acquisitions expected to be incremental to the existing trajectory. The Rs 31,500 million capital infusion is intended primarily for acquisitions of operating hospitals rather than greenfield expansion.

Management plans to pursue two to four strategic acquisitions. Three to four assets are currently under active evaluation, with meaningful capital deployment targeted in H2 FY27. Yatharth Hospitals is targeting Rs 2,000 million of additional EBITDA in FY28.

Potential acquisition targets are expected to be high-performing operational super-specialty hospitals with:

• At least 200 to 250 beds.
• Immediate EBITDA contribution.
• A stronger payer mix.
• Higher average revenue per occupied bed.
• Superior operating metrics.

Capacity Expansion and Portfolio Mix

Yatharth Hospitals continues to target approximately 5,000 announced beds over the next three years. Choice has factored in approximately 1,200 additional beds from the Advent investment by FY29, taking estimated total capacity to approximately 6,000 beds.

Expansion will remain cluster based, primarily in North India, with selective evaluation of opportunities in Mumbai and Gujarat. Management expects acquisitions to improve the portfolio’s cash and private-insurance mix and reduce dependence on government business. The company is also expanding oncology services across newer hospitals.

Investment Structure and Governance

The investment is expected to be completed in two tranches: Rs 17,500 million initially and Rs 14,000 million after 15 months. Promoters have a three-year lock-in, while Advent has a permanent restriction on secondary-market sales or sales to competitors.

Financial Estimates

Choice expects revenue to grow at approximately 50 per cent CAGR and PAT at approximately 41 per cent CAGR over FY26 to FY29E. Its operating assumptions include ARPOB growth of approximately 8 per cent annually, operational beds increasing from 1,468 in FY26 to 4,068 in FY29E, and occupancy improving from 68 per cent to 66 per cent after peaking at 68 per cent in FY27E.

Estimate Changes Following the Advent Partnership

Valuation and Expected Return

The target price of Rs 1,350 is based on an unchanged 20 times multiple applied to the average of FY28E and FY29E EV/EBITDA. Choice sees a 22.1 per cent expected share-price return from the report CMP of Rs 1,106.

Key Risks and Execution Factors

The report does not specify formal investment risks. However, its outlook is linked to the execution of the planned acquisitions, the deployment of the Advent capital and the achievement of projected operating growth.