Healthcare Q2 Results Preview - Strong Quarter Aided By U.S. Sales, Higher Margins: PL Capital

PL Capital Report

We expect pharmaceuticals companies under our coverage to report another strong quarter with Ebitda growth of 20% YoY (flat QoQ) aided by-

1. new launches (gRevlimid, gSpiriva, gMyrbetriq, etc.) in the U.S. market,

2. steady domestic business and

3. higher margins.

We expect continued easing of cost pressures during the quarter, which will aid margins YoY. In case of domestic formulation business, volume offtake in the acute and trade generic segments is likely to be healthy given the seasonality.

Our top picks remain Sun Pharma, Lupin, JB Chemicals and Eris Lifesciences.

Seasonally, Q2 is a strong quarter for hospitals given higher incidences of dengue and airborne diseases, which increase patient admissions. We anticipate hospital companies in our coverage universe to post healthy Ebitda growth of 19%.

We see 100-700 bps QoQ improvement in occupancy. On YoY basis, occupancy trend is a mixed bag. We expect sharp QoQ improvement in occupancy for KIMS and Jupiter aided by seasonality and ramp-up of new units.

We anticipate average revenue per occupied bed to continue to remain healthy, aided by improving case and payor mix. Overall, hospital companies are expected to post 19% YoY growth (14% QoQ) in post IND AS Ebitda (~15% YoY Ebitda growth ex of Rs 1.4 billion loss in Apollo 24x7) in Q2.

We remain structurally positive in the hospitals space and expect momentum to continue in H2 FY25 with-

1. further improvement in occupancy,

2. better case mix and

3. new capacity additions.

Our top picks in the sector are Max Healthcare, Jupiter Lifeline and KIMS.

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