Medanta trades higher, Jefferies retains ‘buy’ on growth visibility
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Jefferies anticipates the ramp-up of capacity in Lucknow to aid strong revenue and margin traction for Medanta operator Global Health.
Medanta hospital chain operator Global Health was trading higher in the morning session on April 20, with market analysts optimistic about its expansion in underserved cities like Lucknow and Patna.
Assessing healthcare in Uttar Pradesh, global broking and research firm Jefferies in a report touted the captial city of Lucknow as an emerging healthcare hub in the region.
Jefferies said a significant demand-supply gap in in Lucknow bodes well for private hospitals like Medanta, which has the largest presence in the region, primarily led by cash and insurance patients.
The firm also anticipates Lucknow to see a fast ramp-up and deliver strong growth if the existing trends were to sustain.
Medanta’s Lucknow Hospital started in 2019 and has a bed capacity of 950, with 475 of them being operationalised as of the December quarter of FY23.
Occupancy is also at 60 percent, with an average revenue per occupied bed (ARPOB) at over Rs 58,000, funded entirely from cash and insurance patients, aiding strong revenue and margin traction for Medanta.
Given the demand-supply dynamic, Jefferies said new bed expansion may be filled through cash and insurance patients, which can also result in positive surprises for Medanta.
Jefferies has reiterated its “buy” call on Global Health with a target price of Rs 630, saying it likes the hospital company’s strong clinical excellence reputation and the growth visibility via its new facilities in Lucknow and Patna.
“We value Medanta at 20x FY25E EV/EBITDA (which is at 23 percent/9percent discount to our Max/Apollo price targets),” the broking firm said in the report.
At 10.40 am, Global Health were trading at Rs 501 on the National Stock Exchange, with gains of 0.5 percent from the previous close.
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