Jefferies raises Global Health target by 38% on robust Q3 earnings

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26 Aug, 2025 12:21

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Jefferies India has maintained its 'buy' rating on Global Health Ltd, which operates hospital chain Medanta, and raised its target price by 38 percent after better-than-expected earnings and achieved faster-than-anticipated breakeven of its new hospital.

The firm reported revenue of Rs 706.20 crore in the December quarter, up 19 percent from a year ago, while net profit jumped 11.4 percent to Rs 80.60 crore. EBITDA surged 18 percent to Rs 171.90 crore. The growth was driven by a combination of factors such as higher inpatient volumes, increase in bed occupied days, and change in specialty and payor mix.

"Medanta's 3QFY23 revenue was 6 percent above our estimate, while EBITDA and PAT saw double-digit beats to our numbers. The beat was driven by 30-percent-plus margin in Lucknow hospital while Patna hospital broke even much earlier than our expectation of mid FY24. Our FY24/25 EBITDA estimates moved up 13 percent each on higher margin in developing hospitals," Jefferies India said in its latest note to investors.

The brokerage house revised the target price to Rs 630 a share. It said Medanta's Patna hospital exceeded its expectations by breaking even in the third quarter of FY23, ahead of its projected timeline of mid-year fiscal 2024. Additionally, Lucknow's operations saw significant growth, achieving an EBITDA margin of over 30 percent during the first nine months of fiscal year 2023.

In total, EBITDA from the developing hospitals in Patna and Lucknow increased from Rs 60 crore in the first nine months of fiscal year 2022 to Rs 153 crore in the same period of fiscal year 2023, due to a 78 percent year-on-year increase in occupied beds per day.

In its bull-case scenario, Jefferies has set a price target of Rs 745 per share on the stock. Additionally, Jefferies expects that the company's occupancy in FY25 will be at 64 percent, and its EBITDA margin will be at 25 percent. It has maintained the enterprise value at 21 times the estimated EBITDA for FY25.

Medanta recently announced that it has signed a binding term sheet with Elinquisite Real Estate Private Limited to set up a 300-bed hospital in Indore under an O&M model. Medanta has a 175-bed hospital in Indore under an O&M contract. In 3QFY23, Medanta began construction activities for its Noida unit, which will have 300 beds and is expected to begin operations in FY25.

In January 2023, Medanta Labs announced foray into the diagnostics business. The group plans to expand its diagnostics capabilities in regions where they already have their hospital units. The company has set up 8 collection centres and will expand to 25 in FY23.

Medanta intends to scale up to 10-plus labs with 125-plus collection centres in the next phase. Medanta's current labs in their hospital units have excess capacity and will be utilised as a launchpad for the new diagnostics business.