Q2 results preview: Hospital companies to be driven by higher occupancy, rising per bed revenues

Hospital comanies are set to report strong performance for the quarter ending September keeping Apollo Hospitals Enterprises Ltd, Fortis Healthcare, Narayana Hrudayalaya, Global Health Ltd (Medanta) , Max Healthcare and others is focus.

Better occupancy rates, improving average revenues per operating bed (APROB) are the key reasons which keep analysts positive on better performance by hospitals during Q2.

Growth outlook remains strong for hospital chains as per analysts at ICICI Securities Ltd as higher in-patient and surgery count is generating cash flow, which companies are persistently investing in expanding their network through M&A and organically.

They said that “The Hospital players under our coverage may report a strong performance in Q2FY24 on a sequential basis.” Better occupancy and ARPOB is likely to drive this sequential growth of 9%, 18% and 40% in revenue, Ebitda, net profits in Q2FY24 , respectively, as per them.

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Analysts at Motilal Oswal Financial Services Ltd also expect profitability to improve due to favorable seasonality and improved operating leverage for Hospitals .They expect Apollo Hospitals to deliver sales and net profit growth of 8% and 9% year-on-year in 2QFY24. However, Earnings before interest Tax depreciation and amortisation (Ebitda) is likely to decline 2% YoY due to higher operating expenses for Apollo 24/7. Medanta on the other hand should sustain growth momentum, with 18%, 23%, 31% YoY growth in sales, EBITDA, net profit as per MOFSL. Max Healthcare is expected to deliver a robust performance with 12%, 11%, 14% YoY growth in sales, Ebitda and net profit as per MOFSL estimates.

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The top picks of Motilal Oswal Financial Services include Medanta looking at the fact that scale-up of developing hospitals is driving operating leverage. Analysts At Elara Securities India have given accumulate ratings on Fortis Healthcare, while they have retained buy rating on Shalby Hospitals, given the potential for industry-beating growth and attractive valuations.

JP Morgan’s top picks however included Apollo Hospitals , Fortis and Rainbow Childrens Medicare . In their research report they have said that Occupancy is tracking at a higher level in Q2 relative to Q1 due to seasonality. As Per JP Morgan analysts Healthy demand visibility underpins expansion plans.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.