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Occupancy level to sustain from last quarter- Hospital Q2FY23 Preview
What's buzzing?
A surge in elective surgeries and post Covid induced complications is expected to ensure continued growth momentum for the hospitals space. Lifting of travel restrictions is also likely to propel the international patient mix, touching almost pre-Covid levels. In addition, easing cost is expected to lead to a better margin performance.
Context
Hospitals are structurally well placed with momentum expected to continue from a robust Q1FY23. The momentum is likely to be driven by sequential in-patient volume and, thus, higher In-patient conversion.
Our Perspective
With pent-up demand in elective surgeries and improving maturity profile, hospitals are expected to show a sequential uptick performance in every aspect. Amid optical initiatives like tele-consultation, digital app based drives for treating patients at remote locations, zoning of patients besides higher focus on insurance/out of pocket payees, we expect the hospitals universe to maintain Q1FY23 performance trajectory. Maturing profile of hospitals, reduction in ALOS along with ramp up in occupancy and ARPOB levels have moved hospitals to a better margin profile. During Q2FY23, hospitals were operating at a normal occupancy level with a better mix of high end elective surgeries driving ARPOB levels for hospital chains. The I-Direct hospitals universe is expected to report a sequential revenue growth of 5.3% in Q2FY23 to Rs 8529.1 crore. EBITDA of the I-direct hospital universe is expected to increase ~20% QoQ to Rs 1308 crore. EBITDA margins are likely to grow 192 bps QoQ to 15.3%. On the companies’ front, Narayana Hrudayalaya is likely to post revenue growth of ~8% QoQ while Apollo Hospitals is likely to post ~7% QoQ revenue growth.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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