Yatharth Hospital & Trauma Care Services Limited

[luckbychance]

@Naval

First of all where did you come up with this figure of 32% ROCE? Screener clearly shows ROCE for 2024 was 24%.

Annual Report

@Naval

What you’re claiming is not possible mathematically, if the revenue growth of a company is much more than the return it generates on equity(ROE) than it has to keep infusing funds unless of course as you said it is sitting on Operating Leverage, then it’s Net Profit would increase significantly more and generate more ROE than revenue growth.

I did mention they could take on debt like other hospitals? Right now they are net debt free and even on an absolute basis, the leverage is low. But since debt also exists, hence ROCE and not ROE. As a metric, ROE is more relevant for banks since they’re anyways highly levered & medium for raising capital becomes equity more often than debt.

@Naval

But in the case of Yatharth, as you claim that the company does not need any capital infusion, then why did they use raise capital 3 times in the last 4 years and used all that money to repay debt instead of further expansion? If they could really sustain the growth without capital infusion they wouldn’t dilute their equity.

Past isn’t always a good predictor for future in investing. Not sure how this is relevant on a going forward basis since much has changed operationally (higher ARPOB, case mix, etc.)

@Naval

They have raised capital 3 times in the last 4 years and they will have to keep doing it in the future or borrow debt unless the Operating Leverage kicks in.

Sure, and borrowing debt is fine… they’re pretty much on a net debt free status right now… 5crs of gross debt against 100crs+ of cash. Also the Op leverage is already kicking in… they have pretty high EBITDA margins compared to some others and they only seem to be stabilising at ~30% on a steady state basis (excl. growing hospitals - Jhansi & Faridabad)

[chikspat]

Nuvama come up with research report.
Going Forward:

1. Capacity expansion by adding beds, occupancy increase on Jhansi and Faridabad hospital which are currently at approx. 25% AND 15%.
2. Margin expansion due to increase in ARPOB, Which is at 59% discount to peers in Delhi-NCR region, it will be supported by specialty clinics and treatment.
3. Narrowing down of valuation gap compared to peers.

Disclosure: Invested and biased.
Nuvama 19 Sep 2024.pdf (1.1 MB)

[shunz]

This is great. Did you create this manually? Or did you use some kind of tool to automate this?

[sahilypatel]

Thanks for sharing this! I appreciate your effort.

I have a quick question - why do people post Excel links instead of direct Google Sheet links? With a Google Sheet, we could bookmark it and easily go back. For Excel files, we have to download them each time. Just curious about the reasoning behind this choice.

[UrsRafeek]

Plans To Ramp Up Bed Occupancy Network: Yatharth Hospitals Director Shares On NDTV Profit

Managment interview with NDTV on expansion plan

[nityanandparab]

Company may decide to change the rating agency. In this case existing agency will mention in their report that the issuer company is not co-operating. Over the period of time another agency might come up with new ratings. This is normal and should not be taken seriously.