Target: ₹1,000
CMP: ₹762.50
Manipal Health Enterprises (Manipal Hospitals) is India’s largest private hospital network with an installed bed capacity of 13,140 (as of Q1FY27). It is backed by Singapore’s Temasek Holdings.
After the addition of around 5,400 beds, mainly via M&A during FY23-2, we expect Manipal to focus on improving asset utilisation and operational profitability. Manipal has a visible runway of revenue and earnings growth on the back of its: improving EBITDA margins for its recently-acquired Sahyadri Hospitals through better specialty mix and operational efficiency; improving business mix across network hospitals; the addition of 2,500 beds over FY27-30 (24 per cent brownfield beds) to boost presence in target markets; healthier balance sheet to support M&A; and operating leverage.
We estimate revenue and EBITDA CAGRs of 17.9 per cent and 19.3 per cent over FY26-29e, respectively. We expect adjusted PAT to grow 3x to ₹2,250 crore over FY26-29e (CAGR of 44.3 per cent). Manipal intends to repay ₹5,550 crore of debt using proceeds from the IPO in Q2FY27. We expect Manipal’s net debt/EBITDA ratio to improve to 0.7x in FY27e (from 3.7x in FY26, pre-IPO).
We initiate coverage with a Buy rating with a DCF-driven target price of ₹1,000 on the back of its strong earnings outlook supported by its economies of scale. Manipal is currently trading at 27.5x our FY28 EBITDA estimate. We think improvement in EBITDA margins for Sahyadri Hospitals would be a key re-rating catalyst.