Buy Artemis Medicare Services; target of Rs 390: Anand Rathi

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Volume and Pricing Growth: IP volume rose 12% y/y, while occupancy grew by 400bps y/y to 68.1%, and ARPOB increased 7% y/y to Rs86,631.
  • Strong Operating Leverage: EBITDA rose 8% y/y, driven by higher operating leverage at the Gurugram flagship, with a record EBITDA of Rs710mn and 23.8% EBITDA margin in 2QFY27.
  • Raipur Unit Ramping Up: The Raipur unit exceeded management estimates with an initial ARPOB of Rs30-32k, and break-even is guided at 12-15 months.
  • Oncology Drug Price Capping Unlikely to Impact Earnings: The management believes the ongoing price capping regulations on oncology will have a very marginal impact on EBITDA (~0.5-1%).

Thesis Validation Checklist

To validate the investment thesis, watch for: higher occupancy rates, improving ARPOB, and strong operating leverage at the Gurugram flagship, as well as the Raipur unit's progress towards break-even. Additionally, monitor the impact of oncology drug price capping on earnings and the company's ability to sustain EBITDA margins above 21% in FY27e.