Table of Contents
- Introduction: The Yatharth Hospitals
- Key Operation Metrics
- Industry Analysis
- Strength and Moat for Yatharth Hospitals
- Threats and Weaknesses for Yatharth Hospital
- Yatharth Hospitals Peer Analysis
- Yatharth Hospitals Financial Analysis
- Conclusion
Introduction: The Yatharth Hospitals
Yatharth Hospital & Trauma Care Services Ltd. is one of the leading healthcare service providers primarily in the Delhi NCR region. It was founded by Ajay Kumar Tyagi in the year 2008 with a vision to provide affordable and high-quality healthcare service. Since its inception, it has expanded its footprint, offering a wide range of specialty medical services.
Yatharth Noida Extension and Greater Noida Hospital are the 8th and 10th largest hospitals in Delhi NCR. The total bed capacity of all my 5 hospitals stands at 2100+ beds of which 455 are ICU beds. The company has completed 16,165 surgeries and 15,359 dialysis procedures in FY23.
Company Timeline with Key Achievements and Milestones
2008: Incorporation of the company by Ajay Kumar Tyagi and commencement of operation.
2010: Establishment of the 1st hospital in Greater Noida.
2013: Establishment of a 2nd hospital in Noida with 250 beds.
2018: Expansion of Greater Noida Hospital to 400 Beds
2019: Establishment of 3rd Hospital in Noida Extension.
2022: Adding 4th Hospital by acquiring Jhansi Orchha Hospital adding 305 beds.
2023: Got Listed on NSE and BSE
2024: Added 5th Hospital by acquiring Asian Fidelis Hospital adding 200 beds. Adding 6th and 7th Hospitals in their portfolio. Model Town, Delhi with 300 beds and Faridabad with 400 beds. Raised Rs. 6,250mn via QIP
Area of Clinical Specialties:
- Internal Medicine
- Nephrology & Urology
- Cardiology
- Neurosciences
- General Surgery
- Pulmonology
- Orthopaedics,
- Spine & Rheumatology
- Gynaecology
- Oncology
- Paediatrics
- Others
Geographical Presence:
Yatharth Hospital & Trauma Care Services Ltd. has a total of 5 hospitals and 2 upcoming Hospitals that will be operational by Q1FY26. 4 out of 5 are concentrated in the Delhi NCR region and 1 in Jhansi. The most recent acquisitions are the Asian Fidelis Hospital in Faridabad, rebranded as Yatharth Hospital, Faridabad, and Model Town Hospital, Delhi. The company plans to add 1 hospital each financial year from FY24 to FY26, primarily in North India.
Revenue Bifurcation:
Noida Branch is the highest contributor to the revenue followed by Noida Extension and Greater Noida. Jhansi-Orchha branch which was acquired in 2022 has 305 beds capacity but has only 47% occupancy rate increase from 27% last year which is still quite low. The company has yet to report data on the Faridabad branch as it was acquired this year and operationalized on May 12.
Speciality wise:
- Oncology: 18%.
2. Internal Medicine: 12%.
3. Nephrology & Urology: 12%.
4. Cardiology: 11%.
5. Neurosciences: 8%.
6. General Surgery: 7%.
7. Gastroenterology: 7%.
8. Orthopedics, Spine & Rheumatology: 7%.
9. Gynecology: 5%.
10. Pulmonology: 5%.
11. Pediatrics: 3%.
12. Others: Remaining share
Key Operational Metrics
Average Revenue Per Occupied Bed: Yatharth Hospital ARPOB stands at Rs.30,652 for 9MFY25, up 8% YoY. The Noida Extension branch saw the highest ARPOB at Rs.37,608 and the Jhansi-Orchha branch saw the lowest ARPOB at Rs.13,038(Which has dropped from ~Rs.17,000)
Hospital Occupancy Rate: The occupancy Rate for 9MFY25 has been 61% compared to FY24’s 54%. All the branches have seen improvement in occupancy rate but the most significant improvement has been in the Jhansi-Orchha branch from 27% in FY24 to 47% in FY24.
Average length of stay: Yatharth Hospital ALOS for 9MFY27 has been 4.30 vs FY24’s 4.78, which is still higher compared to its competitors. High ALOS increases the cost for a hospital and also increases patients’ distrust. It’s not always negative, but we have to look at how the company manages its operational efficiency and cost management. Though high ALOS at times shows hospital engagement in more severe and complex cases, which as a result will increase ARPOB over time and can be beneficial.
Operational Beds: Yatharth Currently has 2300+ beds. As investors, we should look at Yatharth’s plan for optimizing existing capacity efficiently and increasing operational performance. 2300+ beds mentioned 1605 are operational and 700 are upcoming in their newly acquired hospitals.
Number of Outpatient Visits: Yatharth Hospital Q3FY25 OPD volume was 92000, and FY24 volume was 327000, which is comparatively lower than other hospital chains. This smaller patient base indicates limited market reach. This may also hint that companies focus on IPD, which contributes 87% of total Yatharth Hospital revenue. Low OPD indicates room for improvement.
Industry Analysis
To understand the hospital business, it is important to understand the healthcare industry, which includes hospitals, medical devices, clinics, medical tourism, health insurance, and medical equipment. So, we will analyze the healthcare industry to understand the basic trends and forecasting to make certain assumptions about the future of hospital businesses in India.
Healthcare Industry
The Healthcare Industry in 2016 was valued at $110Bn and in the year 2023, it was valued at $372Bn. Some estimates suggest that Healthcare Industry by the year 2026-27 will reach a market value of $610Bn. From 2008 to 2023 Healthcare Industry grew at 15.12% CAGR. And from the year 2023 to 2027 it is supposed to grow at 18% CAGR to reach its projection of $610Bn.
In the union budget for 2024-25, the government has allocated Rs.95,957 crore for the healthcare industry, which 10% increase from last year’s budget. India has the world’s largest health insurance scheme (Ayushman Bharat), which is supported by the government. Schemes like Ayushman Bharat benefit private hospitals as they increase their patient base. Indian Healthcare expenditure budget is increasing YoY as % of GDP, from 1.6% in FY21 to 2.1% in FY23 and touched 2.5% in FY24.
FDI
FDI of up to 100% has been permitted under the automatic route in Indian hospitals since 2000. As of FY24, cumulative FDI equity inflows in: Hospitals & Diagnostic centers amounted to $10.27 Bn, Drugs & Pharmaceuticals amounted to $22.53 Bn, and Medical & Surgical appliances totalled $3.29 Bn.
Hospitals/Healthcare Delivery
The Hospital Market in India was valued at $98 billion in FY23 and is projected to reach $193.59 billion by FY32, growing at a CAGR of 8% (Ref. IBEF).
Medical Tourism
Medical tourism is estimated to be valued at USD 10 billion in the year 2024 and is projected to grow at 17% CAGR for the next Decade. It is projected to be valued at upwards of USD 50 billion by the year 2034.
Strength and Moat for Yatharth Hospitals
- Geographical Presence: Yatharth Hospitals’ 4 out of 5 hospitals are concentrated in the NCR region and 1 in Jhansi-Orchha. Also, 2 upcoming hospitals are in the Delhi NCR, so its proximity to major airports like IGI Airport and the upcoming Noida International Airport will immensely benefit Yatharth Hospitals. It would be advantageous for capturing medical tourism. It plans to expand outside NCR and add one hospital each year till FY26. The management’s intent to expand to Tier 2/3 cities will allow it to tap the growing market with less competition and build a recognizable brand.
- Use of Latest Technology: Continuous Investment in the latest equipment and technology helps Yatharth remain at the forefront and compete with bigger players. Medical equipment and new technologies are expensive and often create barriers to entry for new entrants. This is the reason why we are seeing an increase in Oncology, a high-margin specialty that needs upfront investment in the latest equipment.
- Infrastructure: Top-of-the-class infrastructure, even though Yatharth Hospitals are affordable they are equipped with state-of-the-art medical equipment. The large physical infrastructure in housing 1605 beds allows it to cater to a larger patient base. Modern Infrastructure allows Yatharth Hospital to tap the medical tourism market. Two of Yatharth Hospitals are in the Top 10 Largest Hospitals in the Delhi NCR region.
- Service Offering: Yatharth Hospital’s multidisciplinary treatment offering opens the wider gate to serve a wide patient base across medical conditions. Yatharth’s high ALOS indicates possible complex medical cases that indicate expertise in complex medical cases and leads to higher revenue potential. The even distribution of revenue across multiple disciplines shows consistence expertise and it’s hard for any competitor to copy without significant Human Resources and Investment.
- Growth Potential: Opportunities for expansion and the vision of the promoter align very well. The plan to add at least 1 hospital every year till FY26 shows great expansion potential. Expansion not only helps in widening reach to patients but also helps with brand recognition; often, in the hospital industry, brand recognition goes very well with trust. With Recent QIP and excess cash, and plan to further expand to tier 2 and 3 cities in North India.
Threats and Weaknesses for Yatharth Hospitals
- Geographical Presence: Yatharth Hospital is concentrated in a Delhi NCR region which can expose it to regional economic downturns and demographic shifts. The company plans to expand itself in North India, which can mitigate such risks in the coming years.
- Government Schemes: Under revenue bifurcation, we can see almost 37% of total revenue comes from Central, state, and local government bodies under government schemes. So, changes in Government schemes can massively impact Yatharth Hospital’s revenue. It is also one of the primary reasons why it gets a lesser PE multiple compared to its peers.
- Competition: Yatharth Hospital faces competition from both unorganized and organized players because of the low entry barrier, especially for OPD services. Many big players from different industries are entering the Hospital sector because of increasing demand and a huge inflow of foreign investors’ money.
- Regulatory and Compliance Issue: Almost 37% of the business, so for Yatharth hospitals to keep benefiting from government schemes, and recently IMA Haryana planned to stop the Ayushman Bharat scheme because of 400 crores of Unpaid Dues. Compliance with Tax Regulations is important and any unnecessary confusion ruins management’s reputation and investor sentiment.
- Exponential Growth Strategy: Rapid growth, the way Yatharth Hospitals are growing, acquiring new hospitals and expanding the existing ones. Can impact its financial and operational stability. In 2-3 years company almost grew from 1100 beds to 2300+ beds and has a plan to add another 700 beds taking the total to 3000 operational beds by FY28. This is something Investors have to watch and see how it pans out.
Yatharth Hospitals Peer Analysis
While doing competitive analysis we got to understand a few things. Yatharth Hospital needs to increase its overall occupancy rate, which is improving but with new acquisitions, we need to wait and watch how operational efficiency is improved. ARPOB also seems low and an area where it needs to work, the new hospitals are bringing ARPOB down as new hospitals will take time to improve operational efficiency and patient volume. This presents a lot of growth opportunities. Low Outpatient Visits is a major concern, it can reflect challenges related to market positioning, competition, and service expertise/offering. We also see that Yatharth Hospitals is trading at a lower PE compared to its peers, one of the possible reasons could be high revenue dependency on government schemes and the risks attached to it, therefore it gets a lesser PE multiple. Yatharth Hospital’s ROE indicates stronger capital efficiency compared to its peers.
Yatharth Hospitals Financial Analysis
Revenue: Yatharth Hospital’s revenue has been growing at 47.5% CAGR over the last 5 years and 43.4% CAGR over the last 3 years. QoQ revenue growth has slowed down and grew by just 1% for Q3FY25, though the YoY growth rate for Q3FY25 has been 31%.
The management is targeting 30% YoY growth for the next fiscal year by improving the operational efficiency of newly acquired hospitals. Also, the management is trying to increase the ARPOB. There hasn’t been much improvement in ARPOB over the last two quarters, we can only assume that with an improvement in Operational efficiency and decreasing dependency on government schemes for revenue, ARPOB can be improved. The other area of Improvement needs to be revenue share between IPD and OPD. OPD volume and revenue contribution need to be improved. The Industry Average revenue mix, OPD has a 30% revenue share, and Yatharth’s OPD revenue share in total Revenue is ~11.6%.
Profitability: EBITDA margin has been stable at around 25%, but has come down 27.1% from Q3FY24. EBITDA margin at 25% is not a concern, anything above 20% indicates strong efficiency. Though Management is anticipating a higher EBITDA margin in the upcoming fiscal year.
PAT looks healthy at 13.9% for Q3FY25, which has fallen compared to the previous quarter, but that’s because of increased depreciation from new acquisitions. PAT is very healthy, but hospitals with specialized fields like oncology and cardiology are expected to maintain 10%-20% PAT because of the high margin. Yatharth Hospital’s 33% business comes from oncology and cardiology.
ROE at 14% and ROCE at 23% for H1FY25 have declined a lot. The decline in ROE from 22% in FY24 to 14% in H1FY25 could be because of higher equity due to recent capital infusion and falling PAT%. ROCE has also fallen from 29% to 23%, which could be because of rapid investments in new acquisitions and expansion-related costs. If these expansions and new acquisitions start generating revenue with appropriate ARPOB and Occupancy rate, ROE and ROCE can improve with improvement in PAT%.
Key Financial Ratios:
Profitability has improved significantly. EBIT, PBT, and NPM have improved a lot, indicating better cost management and good operational efficiency. Falling ROA suggests lower efficiency in utilizing assets to generate revenue/profits. Also, Assets Turnover Ratio has fallen a lot indicating capital-intensive expansion which are still underutilized. The Current Ratio and Quick Ratio might seem very high in FY24 because the company might had surplus liquidity for acquisitions and expansions.
Conclusion
Yatharth Hospital & Trauma Care Services Ltd. is one of the leading hospitals in Delhi NCR. The hospital has significantly improved and maintained strong EBITDA Margins, PAT% is quite an issue as they have fallen a lot but still not bad. Yatharth hospitals have displayed strong revenue growth with 3Yr. CAGR of 37.9%. An area of concern is rising receivables, cash flow from operating activity has turned negative in FY24 with receivables of 119 crore.
Yatharth Hospitals is growing very fast compared to its peers, from 605 Operational beds in FY19 to 1605 Beds in May’24, and an additional 700 Beds will be operational by Q1FY26. With a target of 3000 Beds by FY28. The company has improved the occupancy rates for its mature and newly acquired hospitals demonstrating better operational efficiency under Yatharth Hospitals’ management. Improved ARPOB across mature and newly acquired hospitals. ROCE can be under stress because of rapid growth via acquisitions and expansions.
The hospital has the potential to become one of the biggest Hospital Chains in Northern India. Still, everything depends on how Yatharth Hospitals’ expansion plan plays out and how management plans increase the operational efficiency of newly acquired hospitals. The focus should be on improving ARPOB, Occupancy, and OPD numbers. Another area where management is focusing is lowering the Government payers mix which will help the company get better valuation and cash flow stability.
The risk-to-reward ratio is very high. Because a lot depends upon plans getting executed properly. Management looks optimistic about sustaining growth and future expansions. In the future, I would like to see more acquisitions and expansions taking place in Tier 2 cities. These cities are matching income levels of Tier 1 cities, needs better infrastructure, and have less competition. Ultimately, the true test will be how well these plans translate into operational success and long-term value creation.
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Disclaimer:
“The views and opinions expressed in this report on Yatharth Hospital & Trauma Care Services Ltd. are solely those of the author and are provided for informational purposes only. I am not a SEBI-registered equity research analyst, and the content of this report does not constitute an offer, recommendation, or solicitation to buy or sell any securities. The author may hold positions in the subject securities, which may in turn influence the opinions expressed herein.
This report is not intended to serve as personalized investment advice. Readers are strongly advised to perform their own research and consult with a SEBI-registered financial advisor or other qualified professionals before making any investment decisions. The accuracy and completeness of the information provided in this report are not guaranteed, and any reliance on such information is at the reader’s own risk. Neither the author nor any associated parties shall be liable for any loss or damage arising from the use of this report.”
