A hospital chain operates 3,200 beds across 14 hospitals. Occupancy is 68%. Average revenue per occupied bed day is Rs 38,000, up 6%. EBITDA margin is 22%. Mature hospitals — over five years old — run at 78% occupancy and 28% margin; the six opened in the last three years run at 51% and 9%. The company plans 1,400 new beds over four years at Rs 85 lakh a bed, funded half by debt. Net debt is currently 1.6x EBITDA. A new hospital takes an average of five years to reach mature occupancy.
Write a note with a rating, target and thesis up front, the derivation, the drivers and the risks.
100 points, 60% to pass.
The blended numbers hide the whole story and the note's job is to separate them: a mature estate at 78% and 28% margin is a good business being averaged down by six immature hospitals, which is exactly what expansion is supposed to look like. The question is whether the balance sheet can carry a second wave while the first is still ramping. Rs 1,400 beds at Rs 85 lakh is roughly Rs 1,190 crore, half debt, against net debt already at 1.6x. A strong note values the mature estate and the ramping estate separately, and names the falsifier: occupancy trajectory at the three-year-old hospitals, which is the leading indicator for everything being assumed.