Yatharth Hospitals Receives ‘Buy’ Rating From Choice Institutional Equities; Check the Upside and Rationale
The brokerage highlights that the partnership with a global private equity firm is designed to improve operations and governance, setting the stage for substantial growth as the hospital group shifts from expanding individual facilities to acquiring entire chains.
With a market capitalization of ~ ₹10,630 crore , the shares of Yatharth Hospitals Limited were trading at ₹1,054 , with a 52-week range of ₹1,183 to ₹538 , and the stock trades at a P/E of approximately 55x on FY27E earnings.
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Choice Institutional Equities: Advent Partnership Powers Next Phase Of Growth
Choice Institutional Equities has maintained its Buy rating on Yatharth Hospitals following a management meeting to discuss the company's partnership with Advent International, revising its target price to ₹1,350 from ₹1,100 , implying an upside of approximately 30% from current levels.
The brokerage's thesis centres on management's reiterated confidence in sustaining organic growth of over 30%, with earnings from Advent-backed acquisitions expected to come entirely on top of that existing trajectory rather than replacing it. The company remains focused on adding ₹200 crore of EBITDA through strategic acquisitions, which together with organic expansion offers visibility for the business to grow more than threefold over the next three years while holding margins near 24%.
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The brokerage has factored in roughly 1,200 additional beds by FY29 from the Advent-funded investment, taking total capacity to around 6,000 beds, and has revised its FY27 and FY28 revenue and EBITDA estimates higher to reflect this expanded acquisition pipeline, even as near-term earnings per share estimates have been trimmed to account for equity dilution from the capital raise. Maintaining its valuation multiple of 20x average FY28-29E EV/EBITDA, the brokerage's revised target continues to value the company on the combined strength of its organic growth engine and the incremental earnings power the Advent partnership unlocks.
Business Updates
Management described the Advent deal as a long-term strategic partnership rather than merely a capital infusion, placing equal emphasis on operational value creation and governance enhancement alongside the funding itself. The ₹3,150 crore capital infusion will be deployed primarily to acquire already-operating hospitals rather than fund new greenfield projects, with the company currently evaluating three to four acquisition targets and planning two to four strategic acquisitions overall, with meaningful capital deployment expected in the second half of FY27.
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Acquisition decisions will be driven by EBITDA generation rather than simple bed-count additions, with the company targeting hospitals of a minimum 200-250 bed size that already contribute immediately to earnings, carry a strong payer mix, and post superior average revenue per occupied bed and other operating metrics.
Beyond acquisitions, the company continues to target roughly 5,000 announced beds over the next three years under its existing organic expansion plans, pursued through a cluster-based strategy with North India as the primary focus while selectively evaluating newer markets such as Mumbai and Gujarat.
Future acquisitions are also expected to improve the overall portfolio's payer mix by increasing the share of cash and private insurance patients and reducing dependence on government business, while the company continues to expand its oncology and other high-end specialty services across newer hospitals.
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On governance, promoters remain bound by a three-year lock-in preventing share sales, while Advent faces a permanent restriction against selling in the secondary market or to a competing player, with the investment structured across two tranches to keep capital deployment aligned with the pace of acquisitions and minimise idle cash on the balance sheet.