Medanta - Crafting A Differentiated Ecosystem In Healthcare: Motilal Oswal Initiates Coverage With A 'Buy'

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Medanta Operator Global Health Ltd. has multiple ‘firsts’ in its kitty as it ventured into the uncharted hospital territory successfully. It was the ‘first’ to set-up a large-scale, super specialty and single-location private hospital at Gurugram in CY09. It was also the ‘first’ private company to undertake Greenfield capex for super-specialty hospital at Lucknow (catering to central Uttar Pradesh) and Patna (catering to eastern UP/western Bihar) cities.It has scaled up the developing hospitals significantly to achieve breakeven in the first year of their operations as against industry timeline of two-three years. Further, Medanta’s organic bed capacity expansion plan is already in place until FY28, providing robust visibility of volume-led earnings growth over the next five years.Overall, we expect its sales/Ebitda/profit after tax to register 14%/17%/26% compound annual growth rate over FY23-25 to Rs 35 billion/Rs 8.5 billion/Rs 5.2 billion. This would enable the return on equity to expand 120 basis points to 17.3% over FY23-25. Further, the company had a cash surplus of Rs 5 billion (as of FY23), providing scope for inorganic opportunities. Given the healthy execution skill set, strong brand recall, and growth visibility in near future, we model a 10% premium to Medanta versus industry average of 21 times. Thus, we assign 23 times enterprise value/Ebitda on 12 months forward basis to arrive at our target price of R 840. Initiate coverage with a 'Buy' rating on the stock..Key downside risks Slower rate of bed additions: Any delay in scaling up the bed capacity in the Lucknow/Patna facilities may result in lower revenue for the company. Slower-than-expected medical tourist footfalls: Any unfavorable global development could result in a slower-than-anticipated increase in the number of international patients.Adverse effect of regulatory obstacles: The regulations regarding the pricing cap for services and patient charges could have an adverse impact on Medanta..Click on the attachment to read the full report:.Aavas Financiers, Aptus Value, Home First Finance Gets A 'Buy' As Centrum Broking Initiates Coverage.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Medanta - Crafting A Differentiated Ecosystem In Healthcare: Motilal Oswal Initiates Coverage With A 'Buy'

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