Stock to buy after Q1 results 2026: Emkay sees over 32% upside in this healthcare stock
Emkay Global Financial Services maintains its 'Buy' rating on Park Medi World, raising the target price to ₹375 following strong June quarter results, with revenue growth of 19% YoY and profit after tax increasing by 31%. Capacity expands amid risks in government collections.
Domestic brokerage firm Emkay Global Financial Services has retained its 'Buy' rating on Park Medi World and raised its target price to ₹375 per share from ₹350. The upward revision comes after the company's June quarter earnings surpassed the brokerage's estimates and implies a potential upside of about 32% from the stock's latest closing price of ₹285 per share.
Strong Q1 performance driven by ARPOB growth
Emkay Global Financial Services said Park Medi World delivered a strong June quarter performance, with revenue rising 19% year-on-year (YoY) to ₹4.8 billion, driven by 12% YoY growth in average revenue per occupied bed (ARPOB) following the revision in CGHS rates.
The brokerage noted that inpatient (IP) volumes increased 16% YoY, while outpatient (OP) volumes grew 17% YoY during the quarter. The average length of stay (ALOS) improved to 5.9 days in Q1FY27 from 6.4 days a year earlier.
However, Emkay highlighted that occupancy declined to 55.6% from 67.8% in the year-ago period due to significant capacity additions, with bed capacity expanding 32% YoY.
At the operating level, the brokerage said EBITDA rose 20% YoY to ₹1.2 billion, exceeding its estimates by 11%, while the EBITDA margin expanded 22 basis points YoY to 26.5%, beating its estimates by 256 basis points despite capacity additions and likely losses from the Panchkula unit.
According to Emkay, profit after tax (PAT) grew 31% YoY to ₹825 million, supported by strong operating performance and lower interest costs due to reduced debt. The brokerage also highlighted that the CONGO mix improved to 51.2% from 46% a year ago, while the payor mix stood at 23% cash + TPA and 77% government patients during the quarter.
Expansion roadmap underpins growth outlook
The brokerage said the company's management has laid out a clear expansion roadmap, targeting a 45% increase in bed capacity over the next two years. It added that the management's FY27 guidance of 24% revenue growth and 19% EBITDA growth reflects its focus on profitable growth despite significant capacity additions across existing and new clusters.
Emkay believes Park Medi World's proven track record of acquiring and turning around assets, along with expanding its presence in existing clusters, provides confidence in its growth and margin outlook.
The brokerage also expects the company's improving payor mix, greater focus on high-acuity procedures, and affordable healthcare offerings to support healthy returns despite aggressive expansion plans.
It anticipates the company to deliver a 25% revenue CAGR over FY26–FY29, driven by ARPOB CAGR of 5% and occupied bed days (OBD) CAGR of 19%. The company's net cash balance sheet, improving cash conversion cycle, and low capex-per-bed model should continue to support a re-rating. However, it flagged delays in collections from government scheme patients and execution risks in new markets as key risks.
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