Yatharth Hospital debuts on a quiet note, commands 14% gain at day's high

The stock moved higher to Rs 341, a 14% premium against its issue price of Rs 300 per share, after listing at Rs 306.10 on the NSE.

Shares of Yatharth Hospital and Trauma Care Services made a decent market debut, as they were listed at Rs 306.10, a 2 per cent premium against its issue price of Rs 300 per share on the National Stock Exchange (NSE) on Monday. Post listing, the stock moved higher to Rs 341, a 14 per cent premium to its issue price. On the BSE, the stock listed at Rs 304 and hit a high of Rs 340.90.

At 10:04 AM; the stock was trading at Rs 332.45, an 11 per cent over its issue price. A combined 10.8 million shares had changed hands on the NSE and BSE.

Yatharth Hospital has a presence in Noida, Greater Noida, and Noida Extension and Jhansi (Orchha) with four hospitals with a total bed capacity of 1,405 beds.  Its hospitals in Noida Extension and Greater Noida are the 8th and 10th largest private hospitals of Delhi NCR, respectively, in terms of the number of beds as of FY23. Among key metrics, its average revenue per occupied bed (ARPOB) has risen at a CAGR of 11.7 per cent to Rs 26,538 at the end of FY23.

The Yatharth Hospital IPO had received a good response with the issue subscribed 37.28 times. The public issue was subscribed 8.66 times in the retail category, 86.37 times in the qualified institutional buyers (QIB) category, and 38.62 times in the non institutional investors (NII) category.

India’s current healthcare expenditure is largely dominated by private expenditure. North India regions have lower than average doctor and nurse density per 10,000 population. This is expected to improve going ahead favouring the company’s expansion plans. Its rising focus on building capabilities for new, more advanced and high demand specialities can lead to higher ARPOB, according to the brokerage firm Reliance Securities.

Yatharth’s recent acquisition of Jhansi-Orchha is aimed at further expanding into new geographies and to grow their presence into regional healthcare market. Company intends to focus on more advanced specialties; having high demand in respective markets and deliver a higher ARPOB. With high ROE and ROCE of 36 per cent and 24.4 per cent respectively, analyst at Nirmal Bang believe Yatharth is being offered at a reasonable valuation of 20.9x FY23 EV/EBITDA as compared to its peers.