Following the results announcement, the stock traded at ₹189.00 on February 9, 2026, registering a 1.34% gain on the day. The scrip has demonstrated exceptional momentum over the past year, delivering a staggering 101.39% return compared to the Sensex's 7.97% gain—translating to an alpha of 93.42 percentage points. The company's market positioning has strengthened considerably, with the stock trading above all key moving averages and currently in a mildly bullish technical trend.
The quarter's performance was characterised by strong operational efficiency, with operating profit excluding other income climbing to ₹10.11 crores—the highest in seven quarters—whilst maintaining a healthy operating margin of 21.93%. This represents a significant improvement from the 21.13% margin recorded in the corresponding quarter last year, underscoring the company's ability to scale operations whilst preserving profitability.
Financial Performance: Accelerating Growth Trajectory
Asarfi Hospital's Q3 FY26 financial performance showcased impressive momentum across all key metrics. Net sales of ₹46.10 crores marked a 40.16% year-on-year expansion, building upon the 45.46% growth recorded in Q2 FY26 and 55.67% surge in Q1 FY26. Sequentially, revenue grew 2.70%, indicating sustained demand for the company's healthcare services despite the typically challenging third quarter.
| Quarter | Revenue (₹ Cr) | QoQ % | YoY % | Net Profit (₹ Cr) | QoQ % | YoY % | OPM % |
|---|---|---|---|---|---|---|---|
| Dec'25 | 46.10 | +2.70% | +40.16% | 5.42 | +29.05% | +102.24% | 21.93% |
| Sep'25 | 44.89 | +25.81% | +45.46% | 4.20 | +34.62% | +47.37% | 19.76% |
| Jun'25 | 35.68 | +5.28% | +55.67% | 3.12 | -13.09% | +115.17% | 19.59% |
| Mar'25 | 33.89 | +3.04% | — | 3.59 | +33.96% | — | 14.96% |
| Dec'24 | 32.89 | +6.58% | — | 2.68 | -5.96% | — | 21.13% |
| Sep'24 | 30.86 | +34.64% | — | 2.85 | +96.55% | — | 21.91% |
| Jun'24 | 22.92 | — | — | 1.45 | — | — | 20.72% |
The company's profitability metrics demonstrated remarkable improvement. Net profit of ₹5.42 crores in Q3 FY26 represented a doubling from ₹2.68 crores in the year-ago quarter, whilst PAT margin expanded to 11.76% from 8.15%—a substantial 361 basis point improvement. This margin expansion was driven by operational efficiency gains, with operating profit excluding other income reaching ₹10.11 crores and operating margin touching 21.93%, the highest level in seven quarters.
Employee costs increased to ₹7.49 crores in Q3 FY26 from ₹4.53 crores year-on-year, reflecting the company's expansion initiatives and talent acquisition efforts. However, this 65.34% increase in employee expenses was well-managed relative to the 40.16% revenue growth, demonstrating prudent cost control. Interest costs remained stable at ₹1.25 crores, marginally higher than ₹1.18 crores in the corresponding quarter last year, indicating disciplined financial management despite the company's growth investments.
Operational Excellence: Margin Expansion Amidst Growth
Asarfi Hospital's operational performance in Q3 FY26 reflected a well-executed strategy of balancing growth with profitability. The company achieved operating profit (PBDIT) excluding other income of ₹10.11 crores, representing a 45.47% year-on-year increase from ₹6.95 crores. This growth outpaced revenue expansion, resulting in operating margin improvement to 21.93% from 21.13% in the year-ago quarter.
The company's return on equity stood at 12.97% for the latest period, demonstrating improved capital efficiency compared to the average ROE of 9.73%. This higher ROE reflects the company's ability to generate superior returns on shareholder capital, a critical metric for assessing management's effectiveness in deploying resources. The return on capital employed (ROCE) of 8.65% remains modest but shows the company's ability to generate returns above its cost of capital in the competitive healthcare sector.
Strong Operational Efficiency
The company demonstrated exceptional operational leverage in Q3 FY26, with net profit growing at 102.24% year-on-year whilst revenue expanded 40.16%. This 2.5x profit growth relative to revenue growth underscores robust operating leverage and effective cost management. Operating margin of 21.93% represents the highest level achieved in seven quarters, validating the company's scalability and operational excellence.
The balance sheet as of March 2025 showed shareholder funds of ₹80.98 crores, comprising share capital of ₹19.68 crores and reserves of ₹61.31 crores. Long-term debt increased to ₹33.83 crores from ₹17.45 crores, reflecting the company's capital expenditure initiatives to expand capacity. The debt-to-equity ratio of 0.53 remains at moderate levels, providing financial flexibility for future growth whilst maintaining a conservative capital structure.
Fixed assets stood at ₹101.64 crores as of March 2025, up from ₹93.77 crores in the previous year, indicating ongoing investments in infrastructure and medical equipment. Current assets of ₹58.48 crores provided adequate working capital support, though the cash flow from operations turned negative at ₹4.00 crores in FY25 due to working capital buildups associated with rapid growth. This represents a temporary phenomenon typical of fast-growing companies and is expected to normalise as the business scales.
Healthcare Sector Dynamics: Capitalising on Industry Tailwinds
The Indian healthcare sector continues to benefit from structural growth drivers including rising healthcare awareness, increasing insurance penetration, and growing demand for quality medical services. Asarfi Hospital, operating in the Bihar and Jharkhand markets, is well-positioned to capture this growth in underserved regions where healthcare infrastructure remains underdeveloped relative to metropolitan areas.
The company's five-year sales growth of 22.70% demonstrates its ability to expand market share in a fragmented industry. This growth rate significantly outpaces the broader hospital sector, reflecting the company's competitive positioning and execution capabilities. The consistency of quarterly revenue growth—with Q1, Q2, and Q3 FY26 all posting 40%+ year-on-year expansion—validates the sustainability of this growth trajectory.
Regional Healthcare Leader
Asarfi Hospital's focus on tier-2 and tier-3 markets in eastern India provides a differentiated growth opportunity. With limited competition from large hospital chains in these markets and rising healthcare demand from an expanding middle class, the company enjoys favourable market dynamics. The 40%+ revenue growth sustained across three consecutive quarters demonstrates strong market acceptance and the company's ability to scale operations in its target geographies.
The company's ability to maintain operating margins above 20% whilst growing rapidly distinguishes it from many peers. This reflects operational discipline, efficient asset utilisation, and pricing power in its markets. The gross profit margin of 22.43% in Q3 FY26, up from 20.25% year-on-year, indicates improving service mix and potentially higher-margin speciality services contributing to revenue growth.
Peer Comparison: Competitive Positioning Analysis
Within the hospital sector peer group, Asarfi Hospital demonstrates competitive valuation metrics combined with solid operational performance. With a market capitalisation of ₹374.00 crores, the company ranks third amongst its immediate peer set, providing investors with exposure to a mid-sized, high-growth healthcare provider.
| Company | Market Cap (₹ Cr) | P/E (TTM) | P/BV | ROE % | Debt/Equity |
|---|---|---|---|---|---|
| Asarfi Hospital | 374.00 | 33.87 | 4.39 | 9.73% | 0.53 |
| GPT Healthcare | — | 26.06 | 4.16 | 20.93% | 0.25 |
| Gujarat Kidney | — | 593.93 | 472.21 | 0.00% | 0.00 |
| Lotus Eye Hospital | — | 388.79 | 4.28 | 4.87% | 0.03 |
| Aashka Hospitals | — | 75.26 | — | — | — |
| Abate As Industries | — | 163.19 | 1.06 | 0.00% | 0.03 |
Asarfi Hospital's P/E ratio of 33.87x appears reasonable relative to the peer group average of approximately 249x (excluding extreme outliers), particularly given the company's superior growth trajectory. The company's ROE of 9.73%, whilst lower than GPT Healthcare's 20.93%, reflects its growth investment phase and compares favourably to other peers. The price-to-book ratio of 4.39x aligns closely with comparable hospital operators, suggesting fair valuation relative to book value.
The company's debt-to-equity ratio of 0.53 positions it in the middle of the peer range, indicating a balanced approach to leverage. This moderate debt level provides financial flexibility for expansion whilst maintaining adequate interest coverage, with EBIT-to-interest ratio of 5.07x demonstrating comfortable debt servicing capacity. The debt-to-EBITDA ratio of 2.00x remains within acceptable limits for a growing healthcare business.
Valuation Analysis: Attractive Entry Point for Growth Investors
At the current market price of ₹189.00, Asarfi Hospital trades at a P/E ratio of 33.87x based on trailing twelve-month earnings. This valuation appears attractive when contextualised against the company's growth profile, with net profit expanding at over 100% year-on-year in the latest quarter. The PEG ratio of 0.21x—calculated using the five-year EBIT growth rate of 14.76%—suggests the stock is undervalued relative to its growth potential.
The company's enterprise value-to-EBITDA multiple of 17.49x reflects a reasonable valuation for a high-growth healthcare provider. This metric accounts for the company's debt levels and provides a more comprehensive valuation perspective than P/E alone. The EV-to-sales ratio of 3.46x and EV-to-capital employed ratio of 3.21x further validate the attractive valuation, particularly given the accelerating revenue growth trajectory.
The stock's valuation grade has evolved positively, currently rated as "Very Attractive" since November 3, 2025. This assessment reflects the combination of reasonable valuation multiples and strong operational performance. The price-to-book ratio of 4.39x, whilst representing a premium to book value, appears justified given the company's improving return on equity and consistent profitability growth.
From a technical perspective, the stock has demonstrated strong momentum, trading above all key moving averages including the 200-day moving average of ₹146.35. The current price of ₹189.00 represents a 159.26% appreciation from the 52-week low of ₹72.90, though it remains 14.48% below the 52-week high of ₹221.00, providing potential upside as the company continues to deliver strong results.
Shareholding Pattern: Stable Promoter Base with Minimal Institutional Presence
The shareholding structure of Asarfi Hospital reflects a stable promoter base with minimal institutional participation, typical of micro-cap companies in early growth phases. Promoter holding has remained constant at 61.17% across the last five quarters, demonstrating strong promoter commitment and confidence in the company's prospects. Importantly, there is zero promoter pledging, eliminating concerns about financial stress or potential equity dilution.
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 61.17% | 61.17% | 61.17% | 61.17% | 0.00% |
| FII | 0.00% | 0.05% | 0.10% | 0.00% | -0.05% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 1.98% | 2.19% | 3.18% | 2.92% | -0.21% |
| Non-Institutional | 36.85% | 36.59% | 35.55% | 35.91% | +0.26% |
Institutional holdings remain minimal, with total institutional holding at just 1.98% as of December 2025. Foreign institutional investors have completely exited their small position, declining from 0.10% in June 2025 to zero in the latest quarter. Other domestic institutional investors hold 1.98%, down marginally from 2.19% in the previous quarter. The absence of mutual fund and insurance company holdings reflects the company's micro-cap status and limited research coverage.
Non-institutional investors, comprising retail and high-net-worth individuals, hold 36.85% of the equity, showing a marginal increase of 0.26 percentage points quarter-on-quarter. This growing retail interest aligns with the stock's strong price performance and improving operational metrics. As the company continues to deliver consistent results and scales operations, increased institutional participation could provide further valuation support.
Stock Performance: Exceptional Returns Across Timeframes
Asarfi Hospital's stock has delivered extraordinary returns across multiple timeframes, significantly outperforming both the Sensex and the broader hospital sector. Over the past year, the stock has surged 101.39%, more than doubling investor wealth, whilst the Sensex advanced just 7.97%—translating to an impressive alpha of 93.42 percentage points.
| Period | Stock Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | 8.00% | 2.94% | +5.06% | — |
| 1 Month | 6.18% | 0.59% | +5.59% | — |
| 3 Months | 32.17% | 1.02% | +31.15% | — |
| 6 Months | 44.00% | 5.27% | +38.73% | — |
| YTD | 0.48% | -1.36% | +1.84% | — |
| 1 Year | 101.39% | 7.97% | +93.42% | 14.92% |
| 2 Years | 110.37% | 17.42% | +92.95% | — |
The momentum has been particularly strong in recent months, with the stock posting a 32.17% return over three months and 44.00% over six months, vastly outpacing the Sensex's 1.02% and 5.27% returns respectively. Even in the short term, the stock has maintained its outperformance, gaining 6.18% over one month against the Sensex's 0.59% advance, and 8.00% over one week compared to the benchmark's 2.94% gain.
Relative to the hospital sector, which delivered 14.92% returns over one year, Asarfi Hospital's 101.39% gain represents a massive outperformance of 86.47 percentage points. This sector-relative outperformance validates the company's superior operational execution and growth trajectory compared to industry peers. The two-year return of 110.37% further demonstrates the sustainability of this outperformance, with alpha of 92.95 percentage points versus the Sensex.
The stock's high beta of 1.50 indicates greater volatility than the broader market, typical of small-cap growth stocks. The one-year volatility of 47.56% reflects this characteristic, though the risk-adjusted return of 2.13 demonstrates that investors have been adequately compensated for this volatility. The positive Sharpe ratio confirms that the excess returns justify the additional risk, positioning the stock in the "high risk, high return" category appropriate for growth-oriented investors.
Investment Thesis: Growth Momentum Meets Reasonable Valuation
The investment case for Asarfi Hospital rests on four key pillars: accelerating financial performance, operational efficiency, attractive valuation, and favourable technical momentum. The company's proprietary Mojo score of 74 out of 100 translates to a "BUY" rating, upgraded from "HOLD" on October 29, 2025, reflecting improving fundamentals across multiple parameters.
The valuation assessment of "Very Attractive" reflects the combination of reasonable multiples and strong growth prospects. With a P/E ratio of 33.87x and PEG ratio of just 0.21x, the stock offers compelling value for investors willing to accept the higher volatility associated with micro-cap healthcare stocks. The quality grade of "Average" acknowledges the company's solid but not exceptional return ratios, with room for improvement as operations scale and leverage improves.
The positive financial trend, marked by consecutive quarters of 40%+ revenue growth and accelerating profitability, provides strong fundamental support for the stock's valuation. The mildly bullish technical trend, with the stock trading above all major moving averages and demonstrating strong momentum indicators, suggests continued price support in the near term. The convergence of improving fundamentals and positive technical indicators creates a favourable risk-reward profile.
Key Strengths & Risk Factors
KEY STRENGTHS
- Exceptional revenue growth of 40.16% YoY in Q3 FY26, demonstrating strong market demand and successful expansion strategy
- Net profit surge of 102.24% YoY reflects superior operational leverage and improving profitability profile
- Operating margin of 21.93% represents highest level in seven quarters, validating operational efficiency gains
- Zero promoter pledging eliminates governance concerns and demonstrates promoter confidence
- Debt-to-EBITDA ratio of 2.00x and EBIT-to-interest coverage of 5.07x indicate comfortable debt servicing capacity
- Stock outperformance of 93.42 percentage points versus Sensex over one year validates investment thesis
- PEG ratio of 0.21x suggests significant undervaluation relative to growth potential
KEY CONCERNS
- Micro-cap status with market capitalisation of ₹374 crores limits liquidity and increases volatility
- Minimal institutional holdings of 1.98% reflects limited research coverage and potential discovery risk
- Negative operating cash flow of ₹4.00 crores in FY25 raises working capital management questions
- ROE of 9.73% and ROCE of 8.69% remain below optimal levels, though improving
- High beta of 1.50 and volatility of 47.56% unsuitable for risk-averse investors
- Concentration in Bihar-Jharkhand markets creates geographic risk and limits diversification
- Limited operating history and absence of dividend policy restricts income-focused investors
Outlook: Key Monitoring Points
POSITIVE CATALYSTS
- Sustained quarterly revenue growth above 30% would validate market expansion strategy
- Operating margin stability above 20% demonstrates pricing power and operational efficiency
- Improvement in operating cash flows as working capital cycle normalises with scale
- Institutional investor interest as company scales and improves visibility
- Expansion into new geographies or speciality services could unlock additional growth
RED FLAGS
- Deceleration in quarterly revenue growth below 20% would signal market saturation
- Operating margin compression below 18% could indicate pricing pressure or cost inflation
- Deterioration in debt metrics or increase in leverage beyond current levels
- Persistent negative operating cash flows beyond two consecutive years
- Promoter stake reduction or any pledging of shares would raise governance concerns
The forward outlook for Asarfi Hospital remains constructive, supported by structural healthcare sector tailwinds, the company's proven execution capabilities, and expanding market opportunities in underserved regions. The key monitoring points centre on sustaining revenue growth momentum, maintaining margin discipline, and converting accounting profits into cash flows as the business matures. Investors should track quarterly results closely for evidence of continued operational improvement and market share gains.
The Verdict: Compelling Growth Story at Reasonable Valuation
Score: 74/100
For Fresh Investors: Asarfi Hospital presents an attractive entry opportunity for growth-oriented investors with appropriate risk tolerance. The combination of accelerating financial performance, reasonable valuation metrics, and strong stock momentum creates a favourable risk-reward profile. Accumulate on dips towards ₹175-180 levels for a 12-18 month investment horizon.
For Existing Holders: Continue holding with a positive outlook. The Q3 FY26 results validate the investment thesis, and the company's improving operational metrics support further upside potential. Consider booking partial profits above ₹210 to manage portfolio risk, whilst maintaining core position for long-term wealth creation.
Fair Value Estimate: ₹215-225 (13.76% to 19.05% upside from current levels)
Asarfi Hospital's exceptional Q3 FY26 performance—characterised by 102% profit growth and sustained revenue momentum—demonstrates the company's ability to execute its growth strategy whilst expanding margins. The valuation remains attractive at 33.87x P/E with a PEG ratio of 0.21x, particularly given the accelerating profitability trajectory. Whilst micro-cap risks and limited institutional participation warrant caution, the fundamental story remains compelling for investors seeking high-growth healthcare exposure in underserved markets.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
