Shares of Global Health jumped nearly 3.19% during Thursday's trade to hit an intraday high of ₹717 apiece, coming close to their 52-week high of ₹731. This uptick in shares came after the brokerage firm Motilal Oswal initiated coverage on the stock with a 'buy' rating.
Global Health Limited, which operates and manages hospitals under the Medanta brand, got listed on the exchanges on November 16, 2022, at a premium of 19% and closed 24% higher on the first day. Since its market debut, the stock has consistently displayed an upward trajectory, delivering an impressive 72% return to date, marking an extraordinary 113.5% increase from its IPO price of ₹336.
"Medanta has multiple ‘firsts’ in its kitty as it ventured into uncharted hospital territory successfully. It was the ‘first’ to set up a large-scale, super speciality and single-location private hospital at Gurugram in CY09. It was also the first private company to undertake Greenfield capex for the super-speciality hospital at Lucknow (catering to central UP) and Patna (catering to eastern UP/western Bihar) cities," said Motilal Oswal.
Medanta has scaled up the developing hospitals significantly to achieve breakeven in the first year of their operations, as against the industry timeline of 2–3 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, the brokerage stated.
Motilal Oswal expects Medanta's sales, EBITDA, and PAT to grow at 14%, 17%, and 26% CAGR over FY23–25 to ₹35 billion, ₹8.5 billion, and ₹5.2 billion, respectively. This growth is expected to elevate ROE by 120 basis points to 17.3% over the same period. Notably, the company boasts a cash surplus of ₹5 billion (as of FY23), creating opportunities for inorganic expansions, it added.
Given the healthy execution skill set, strong brand recall, and growth visibility in the near future, Motilal Oswal has assigned a 10% premium to Medanta compared to the industry average of 21x. Thus, it assigned 23x EV/EBITDA on a 12M forward basis to arrive at a target price of ₹840 apiece, initiating with a 'buy' rating. This target price implies an upside potential of 21% for the stock from its previous closing price.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.