India’s hospital sector isn’t short on giants.
Max Healthcare today runs a tight ship: with over 5,000 beds, nearly Rs 9,000 crore in revenue, and an EBITDA margin north of 26%. Its focus on brownfield expansion, metro-centric strategy and capital-light diagnostics has made it one of the most profitable healthcare businesses in the country.
But Max wasn’t always this big or this polished.
Back in its earlier years, it was still grappling with utilisation, sweating its assets, and figuring out how to scale without diluting profitability. It grew smart by acquiring struggling hospitals, turning them around, and keeping the return on capital at the centre of the story.
That version of Max, still in build mode but operationally efficient, is what Yatharth Hospital resembles today. And that’s what makes Yatharth interesting.
The Power of Focus
Unlike Max, which operates across multiple cities, Yatharth Hospitals has stayed close to home. Its four hospitals and two clinics are all based in Delhi-NCR and UP.
That may sound limiting, but it’s by design. Healthcare is local. And Yatharth is playing to that strength.
In FY25, Yatharth clocked Rs 880 crore in revenue, growing at 34% CAGR over the last three years. Its operational beds rose from 874 to 1,282 during this period. Occupancy went up from 45% to 61%. Average Revenue per operational bed per day (ARPOB) improved from Rs 23,500 in FY22 to Rs 30,829 in FY25, a sign that pricing power is improving and patient mix is maturing.
What’s more impressive is how margins have held up.
Yatharth has averaged over 26% EBITDA margins over five years. That’s a number not many chains can flaunt at this scale.
Compare that with Max, which posted 27% EBITDA margins. But of course, that’s from a much larger base.
Brownfield, Not Blind Growth
Max’s expansion hasn’t been random. It has focussed on brownfield growth, adding capacity where it already had infrastructure. In Saket, it’s building a new tower to nearly double capacity. It has done the same in Nanavati Mumbai and other locations. No greenfield overreach.
Its acquisition strategy has also been targeted. It acquired Jaypee Hospital in Noida, Alexis in Nagpur, and Sahara in Lucknow. These hospitals had capacity but were underperforming. Max plugged in its operating model and brand to turn them around.
Yatharth is walking a similar path. While it continues to focus on greenfield expansion, the company is also actively evaluating acquisition opportunities, particularly underperforming hospitals that it can turn around and integrate into its existing model. The strategy blends fresh capacity with smarter capital deployment.
In FY26 alone, Yatharth plans to add around 700 beds. And by FY28, it expects to add another 200–300 beds through greenfield expansion and 450 beds through brownfield projects and acquisitions. That would take its operational bed base to nearly 2,800, more than double its FY25 count.
Capital Discipline: A Key Advantage
What is notable is how this growth is being financed.
Yatharth is not chasing size at any cost. It raised equity capital recently, not out of necessity, but as a conscious move to clean up its balance sheet and create financial flexibility for this capex cycle. A large part of the proceeds went toward repaying debt, with the rest earmarked for hospital expansion.
Management has been clear that this was a one-time dilution. With strong internal accruals and a healthy cash balance, future expansion is expected to be funded through operating cash flows and minimal incremental debt.
In FY25, the company spent around Rs 300 crore on capex. Gross debt stood at just Rs 12 crore, while cash reserves were Rs 500 crore.
This balance-sheet prudence not only reduces financing risk but also keeps return ratios healthy. It is a quiet but meaningful edge in a capital-intensive industry.
The Math of Compounding
With that kind of financial discipline in place, the growth math starts to look interesting.
Let’s run a simple set of assumptions.
ARPOB continues to grow at 6 to 8% CAGR. Occupancy crosses 68% by FY28. Operational beds rise to 1,800+.
That would put revenue somewhere above Rs 1,600 crore by FY28. If EBITDA margins hold at 24-25%, as guided by the management, the company could generate over Rs 350 crore in operating profit.
Note: This is not a prediction of where the stock price could head. It’s just an if-then calculation for academic purposes.
For a hospital stock with high margins, strong ROCE and room to grow, that’s not an aggressive bet. Especially when peers like Max already trade at elevated multiples, pricing in years of steady growth.
What Investors Tend to Miss
Markets like scale. They like the brand. They like visibility. And they especially like predictability. That’s why Max, Apollo, and Fortis are investor favourites.
But compounding doesn’t always come from visibility.
Sometimes it comes from focus. And staying small enough to stay agile.
Yatharth doesn’t have international patients yet. It doesn’t have a pan-India footprint. But it does have a playbook that is working, and that matters more.
The market will notice eventually. But by then, the easy money is often gone.
Boring? Maybe. But Built to Compound.
Let’s be honest. The hospital sector isn’t exciting. It’s not AI. It’s not EVs. It’s not the next digital payments revolution.
It’s boring. It’s brick-and-mortar. It’s slow.
But it’s also predictable.
Patients will keep coming. Bed capacity will keep rising. Occupancy will inch up. Margins will stabilise. And if you do this at scale, and you do it without wasting capital, you create serious wealth.
Max has already done that. Its market cap has compounded smartly over the years. Apollo did it before them.
Yatharth could be next.
It won’t be loud. There won’t be flashy M&A or 10x revenue in three years.
But if it simply executes what it has laid out, expansion, cost control, and return-focused growth, investors today could see steady, low-noise compounding over the next five to seven years.
That, for long-term investors, is far more attractive than a turnaround story or a speculative digital bet.
What Could Go Wrong?
Of course, even the most efficient compounding stories carry risk.
The biggest one for Yatharth is execution. The company is in the middle of its most aggressive expansion phase yet. Adding over 1,500 beds in three years, especially across new locations, stretches both capital and management bandwidth. If new hospitals take longer to ramp up, or if occupancy and ARPOB growth disappoint, return ratios could slip.
There is also the risk of integration. Turning around underperforming hospitals is not easy. Max has done it well, but it has scale, brand strength, and access to specialist talent. Yatharth’s acquisition strategy is still untested. A single misstep, whether operational or financial, could hurt margins and drag down profitability.
Then there is competition. Delhi-NCR is a crowded market, with established players like Max, Fortis, and Apollo already entrenched. For Yatharth to keep improving ARPOB and maintain pricing power, it will need to keep investing in talent, technology, and differentiated services. And it must do all this while preserving its capital discipline.
Finally, there is the risk of valuation running ahead of fundamentals. As investors begin to take notice, the stock may start pricing in best-case scenarios. In that case, even decent execution may not deliver strong returns.
None of these are deal-breakers. But they are worth keeping in mind. Because the biggest enemy of compounding is not volatility. It is complacency.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
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