Buy Paras Healthcare; target of Rs 900: Choice Institutional Equities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Specialty mix driving high-value growth: Paras Healthcare's six core specialties (CONGO-R) contribute ~74% to revenue, focusing on high-value tertiary and quaternary care.
  • Improving occupancy and operational leverage: Rising occupancy, higher patient throughput, and better utilization of existing infrastructure are expected to drive revenue productivity and improve operating leverage.
  • Expansion pipeline: The company is developing a 300-bed hospital in Gurugram and a 500-bed hospital in Ludhiana, expected to be major growth drivers over the next 12-18 months.
  • Long-term margin potential: The company targets long-term EBITDA margin in the mid-20s, with EBITDA estimated to grow significantly over FY26-29E.

Thesis Validation Checklist

  • Occupancy growth: Watch for occupancy to reach +65% by FY29E, indicating successful ramp-up of newer hospitals.
  • Revenue and EBITDA growth: Monitor revenue and EBITDA expansion at a CAGR of 21.9% and 29.4% over FY26-29E, respectively.
  • Margin improvement: Track EBITDA margin improvement, targeting the mid-20s in the long term.
  • Debt repayment: Note the repayment of INR 375 Cr of debt from IPO proceeds, expected to reduce interest costs and support profitability.