Yatharth in limelight

Yatharth Hospital & Trauma Care Services extended its rally for the second straight day, rising 4.82% to Rs. 1,122 on the BSE. The stock opened at Rs. 1,099.70 against the previous close of Rs. 1,070.45 and touched an intraday high of Rs. 1,183.15, also its 52-week high. Trading activity remained strong, with turnover at Rs. 20.37 crore and market cap at Rs. 10,810.96 crore.

Trigger

• Advent International will invest Rs. 3,150 crore in Yatharth Hospital.
• The investment is for a 24.9% stake.
• This is primary capital, meaning money comes into the company for growth.
• The Tyagi family will remain the largest shareholder after the deal.
• Yatharth operates nine multi-speciality hospitals with over 2,800 beds.
• The stock is up around 20% in two days after the announcement.

The market is reading this as a major validation event. Advent is a large global private equity investor, and a Rs. 3,150 crore cheque into Yatharth signals confidence in the company’s hospital platform, growth plans and India’s healthcare opportunity. The fact that the investment is primary capital is important because it gives Yatharth funds to expand rather than just allowing existing shareholders to exit.

The bigger sector message is that hospitals remain a hot consolidation theme. The Street is willing to re-rate mid-sized hospital chains where growth visibility, bed expansion and operating leverage are strong.

After the sharp two-day move, Yatharth trades at a rich PE of around 62x consolidated and 112x standalone, with the exchange flag also showing that the scrip PE has stayed above 50 for the previous four trailing quarters.