Healthcare stock with ₹1,500 Cr capex plan; Nuvama initiates Buy with 32% upside target

Synopsis: Yatharth Hospital which has given 127.49 percent return in 5 years, is emerging as a fast-growing player in India’s healthcare sector, driven by patient-centric care and network expansion. With ongoing capacity growth and a focus on specialty services, the analyst expects it to deliver strong growth, projecting a 30 percent revenue CAGR and a 31 percent EBITDA CAGR during FY25–FY28E.

India’s healthcare sector is expanding rapidly, driven by rising demand for quality treatment, improved medical infrastructure, and increased health awareness. In this evolving landscape, Yatharth Hospital has begun emerging as a fast-growing player, particularly due to its patient-centric care, modern facilities, and focus on specialised treatment segments. As competition intensifies among top hospital chains, including Apollo and Max, the next few years will determine whether Yatharth can scale its network, enhance clinical excellence, and position itself as a stronger contender in India’s healthcare ecosystem.

Yatharth Hospital & Trauma Care Services Ltd, with a market capitalization of Rs. 6,706.75 crore, is trading at Rs. 696.45 per equity share, up by 0.22 percent from its previous day’s close price of Rs. 694.95 per equity share.

Industry Overview

India’s healthcare industry has been on a high-growth trajectory, driven by rising lifestyle diseases, increasing medical insurance penetration, and expanding private healthcare infrastructure. With a growing middle-class population seeking quality treatment, hospitals are investing heavily in advanced medical technology, skilled specialists, and multi-super-speciality care. Government schemes, medical tourism, and higher healthcare spending per capita are also contributing to long-term sector growth, making private hospital chains important pillars of the country’s healthcare delivery system.

Large players like Apollo Hospitals, Max Healthcare, Fortis, and Manipal dominate the organised market, leveraging scale, strong brand recognition, and clinical expertise to maintain leadership. However, the industry still holds room for emerging players due to underserved Tier-II and Tier-III cities, where demand for accessible and quality healthcare is rising faster than supply. This evolving landscape provides newer hospitals such as Yatharth with an opportunity to expand geographically, improve operating metrics, and capture market share over time.

Stock return

Over the past three months, the investment has delivered a negative return of -12.74 percent, while the six-month performance shows a strong gain of 31.27 percent. On a one-year basis, the return stands at 10.54 percent, indicating moderate growth. However, over a longer horizon of five years, the investment reflects a significant appreciation of 127.49 percent, highlighting its long-term wealth-creation potential. Notably, from its low of Rs. 358.85 on 28 February 2025, the stock has surged 94.05 percent, showcasing a sharp recovery and strong momentum.

About the Company

Yatharth Hospital & Trauma Care Services Limited operates a network of super-specialty hospitals in India, delivering comprehensive healthcare services across a wide range of medical fields. Its expertise spans cardiology, neurology, nephrology, gastroenterology, pulmonology, pediatrics, oncology, orthopedics, rheumatology, cosmetic and plastic surgery, ENT, dermatology, endocrinology, and critical care. The company also offers advanced medical solutions such as GI and liver transplant, robotic surgery, kidney transplant, bone marrow transplant, and IVF and fertility treatment, making it a multi-disciplinary healthcare provider.

Beyond core clinical services, Yatharth Hospital provides emergency care, radiology, pathology, anesthesiology, physiotherapy, rehabilitation, nutrition support, ophthalmology, dentistry, and psychiatric care, ensuring end-to-end medical support for patients. The company also engages in the sale of medicines and canteen food within its facilities. Established in 2008 and headquartered in Noida, it has grown into a prominent healthcare institution known for its advanced treatments and specialized services across various medical disciplines.

Financial Outlook

The company delivered strong topline growth in Q2FY26 with revenue rising to 279 crore, an increase of nearly 28 percent YoY compared to 218 crore in Q2FY25 and up around 8 percent QoQ over 258 crore in Q1FY26, indicating steady business momentum. EBITDA improved to 65 crore, reflecting a growth of about 18 percent YoY from 55 crore and a slight rise of nearly 1.5 percent QoQ from 64 crore, showcasing sustained operating efficiency and healthy cost control.

Net profit for Q2FY26 stood at 41 crore, up around 32 percent YoY against 31 crore, although marginally lower by approximately 2 percent QoQ from 42 crore in the previous quarter. Overall, the company posted solid YoY performance across key metrics with modest sequential movement, highlighting stable operations and consistent profitability.

Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 45 percent, a profit CAGR of 152 percent, reflecting both its operational performance and market confidence.

A return on equity (ROE) of about 10.4 percent and a return on capital employed (ROCE) of about 14 percent and the debt to equity ratio at 0.02x, demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 44x which is lower as compared to its industry P/E 55.2x.

Q2 Highlights

Yatharth Hospitals continued to improve in Q2 FY26 with bed capacity now above 2,550, showing ongoing expansion. Occupancy reached 66 percent, growing 6 percent from last year, which means more beds are being used. Revenue per patient also improved as ARPOB increased to Rs. 32,015, up 4 percent YoY, reflecting a better patient mix and pricing. The average length of stay remained steady at 4.04 days, showing stable patient flow and efficient hospital operations.

Capex Guidance 

Management clarified that the previously indicated Rs. 1,400–1,500 crore capex plan, earlier communicated as a three-year allocation, will actually be deployed over a longer execution window. While acquisition and expansion decisions will be finalised within the next three years, the full utilisation of the capex pool will stretch over approximately 4.5 to 5 years, considering post-deal development phases and greenfield project timelines. In essence, the company now expects to incur around Rs. 1,500 crore in capex over the next 4.5 years, providing clarity on deployment pace and capital planning for growth initiatives.

Analyst Outlook 

Nuvama has set a target price of Rs.  920 for Yatharth Hospitals (upside of 32.1 percent from current market price), valuing the stock at roughly 20× H1FY28E EV/EBITDA. At its current trading multiple of 17× FY27E EV/EBITDA, the stock offers a meaningful upside potential, making it an attractive ‘Buy’ candidate for investors seeking mid- to long-term returns as the company scales operations.

Domestic brokerage Nuvama expects Yatharth Hospitals to deliver strong growth, projecting a 30 percent revenue CAGR and a 31 percent EBITDA CAGR during FY25–FY28E. Its robust growth trajectory is underpinned by an aggressive bed-capacity expansion,  from 1,605 beds in FY25 to an estimated 2,500 beds in FY26E, and a planned ramp-up to nearly 5,000 beds by FY30E. This scaling comes alongside a strong historical performance, having delivered ~30 percent revenue CAGR between FY22–FY25 while nearly doubling bed capacity. As new hospitals come online in high-potential micro markets like Delhi, Faridabad and Agra, and existing facilities such as the Noida hospitals improve occupancy (targeting ~75 percent) coupled with a better specialty and payor mix, the company expects improved ARPOB and utilization.

Additionally, margin expansion is likely driven by diversification into high-end specialties (oncology, transplants), rising share of private and international patients (projected to double to ~10 percent), reduction in government-mix, and favorable price revisions in government tenders (e.g. CGHS). A strong balance sheet with net cash of Rs. 370 crore and recurring operating cash flows near Rs. 200 crore annually provides capacity to fund the roughly Rs. 1,500 crore capex over the next several years without stressing liquidity, positioning Yatharth for steady profitability and value accretion.

Conclusion

Yatharth Hospital is well-positioned for strong growth, with bed capacity expected to nearly double to 5,000 by 2030. Analyst projections indicate a 30 percent revenue CAGR and 31 percent EBITDA CAGR during FY25–FY28E, supported by rising occupancy, better specialty mix, and a clear Rs. 1,500 crore capex plan. With strong cash flow and a healthy balance sheet, the hospital is likely to strengthen its market position and deliver consistent long-term value in India’s healthcare sector.

Written by Akshay Sanghavi

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