Healthy financials and a high occupancy rate

• GPT Healthcare operates a chain of four hospitals in East India under the brand name 'ILS Hospitals', specializing in nephrology (kidney) and diabetology. The company's hospitals collectively offer 561 beds to cater to patient needs. Despite a marginal decline in net profit in FY23, the company has maintained an impressive net profit margin of 10-11%, reflecting efficient financial management.
• In terms of financial performance, GPT Healthcare has witnessed robust revenue growth, with a Compound Annual Growth Rate (CAGR) of 21% over the last two years. Despite not having the highest Average Revenue per Operating Bed (ARPOB) in the industry, the company has sustained healthy operating and net profit margins. This demonstrates effective cost management and operational efficiency.
• Moreover, GPT Healthcare has received commendable feedback from visitors, boasting a high rating of 4.5/5 for its hospitals, underscoring the quality of service provided. The company's occupancy rate stood at a commendable 60% in FY23, indicating efficient utilization of its bed capacity.
• The company's positive cash flow from operations provides a strong foundation for organic expansion. With plans to add two new hospitals with a combined bed capacity of 292 by FY26, GPT Healthcare aims to further enhance its market presence and service offerings.
• A notable aspect of GPT Healthcare's financial management is its prudent debt reduction strategy. The company has significantly reduced its debt from Rs 123 crore to Rs 55 crore over the years. This debt reduction not only strengthens the company's financial position but also provides room for further improvement in net profit margins.

Fair Valuations

• The company is asking for a PE of 39x and a market cap to sales of 4x which is lower as compared to its listed peers who command higher valuations. These peers command higher valuations due to higher ARPOB and better profit margins. Hence, we believe the company could provide capital appreciation to investors going forward.​