Everyone Knows About Max Healthcare, Apollo Hospitals and Fortis. But Here are 5 Hospital Stocks Flying Under the Radar

India currently has only 1.3 hospital beds per 1,000 population.

There is also a shortage of skilled health workers, with 0.65 physicians per 1,000 people (the World Health Organisation standard is 1 per 1,000 people) and 1.3 nurses per 1,000 people.

An additional 3 million (m) beds will be needed for India to achieve the target of 3 beds per 1,000 people by 2027.

Further, another 1.54 m doctors and 2.4 m nurses will be required to meet the growing demand for healthcare in India.

Demand will also be created due to initiatives like Ayushman Bharat, which boost requirements for health personnel not only in larger cities but also Tier 2 and Tier 3 cities and villages.

India will therefore need to increase the numbers of trained health personnel across various categories to achieve a ratio of at least 2.5 doctors and 5 nurses per 1,000 people by 2034.

We already compete with Asian peers in providing cutting edge medical procedures at a fraction of the global costs. Over the years, this edge has helped Indian hospital chains to attract a substantial number of overseas patients.

While everyone talks about Apollo Hospitals, Max Healthcare, Fortis, and the big names that are popular, there are a few companies that are contributing to the hospital value chain which are currently under the radar.

Let's look at 5 such companies.

#1 Yatharth Hospital

Yatharth Hospital operates five super specialty hospitals located in North India.

The company provides quality healthcare across these hospitals. It plans to expand through a mix of greenfield (new site), brownfield (existing site), and mergers & acquisitions.

Coming to its financials, the company's sales and net profit have grown at a CAGR of 30% and 44% over the past 3 years.

The return on equity has averaged 38% during the same time.

The company last year inaugurated its new super speciality hospital in Model Town, New Delhi. The facility houses 300 beds, including 70 critical care beds, to cater to patients requiring specialised and intensive treatment.

Yatharth Hospital has also added 2 new hospitals, in Delhi and Faridabad, through acquisitions, expanding its total bed capacity to 2,300+ beds.

Its Noida Extension Hospital and Greater Noida is the 8th and 10th largest private hospital in the Delhi NCR, respectively, in terms of number of beds.

The company's planned expansions aim to strengthen its regional dominance in Delhi-NCR and accelerate its leadership through both acquisitions and the expansion of flagship sites.

#2 Rainbow Children's Medicare

Rainbow Children's Medicare operates multi-specialty paediatric, obstetrics, and gynaecology hospital chain in India. It's one of India's largest paediatric hospital chains.

The company offers a wide range of services such as newborn and paediatric intensive care, paediatric multi-specialty services, paediatric quaternary care, obstetrics, and gynaecology.

In July 2024, the Rainbow Children's Hospital launched its Center for Consultations (OPD) in collaboration with Balaji Health Care in Siliguri.

Coming to its financial performance, the company's sales and net profit have grown at a CAGR of 16% and 35% in the past 5 years.

The ROE and ROCE have averaged 17% and 30% during the same period.

Going ahead, the company plans to increase the capacity to 2,595 beds by FY27 and is expected to incur Rs 7-7.5 bn in capex over the next three years.

The company has seen success in complex bone marrow transplantation at its Bangalore BMT unit. Its international business faces regulatory headwinds in Bangladesh, Oman, Sudan.

The management remains optimistic, due to a robust balance sheet, scalable operating model, strong clinical depth, and disciplined project execution.

#3 Kovai Medical

Next on the list is Kovai Medical.

Kovai Medical Center and Hospital (KMCH) is a multispecialty healthcare provider established in 1998 in Coimbatore, Tamil Nadu. The hospital mainly focuses on super specialty care.

The company is investing in latest technologies and has upgraded the pulmonary medicine department with several top-end diagnostic equipment. This has resulted in a standalone center comparable to the best in the world.

Its department of transplant surgeries and medicine has conducted its first-ever conference in transplant imaging.

Kovai Medical has acquired cryoablation system for cardiac arrhythmia, positioning the hospital as a leader in electrophysiology.

Coming to its financial performance, the company's sales and net profit have grown at a CAGR of 14% and 17% in the past 5 years.

The ROE and ROCE have averaged 18-19% during the same period.

The company has steadily increased its bed capacity over the years.

Going forward, its niche presence in the neurology and cardiology segment is expected to support revenues while revenue contribution from medical colleges is also expected to grow.

#4 Shalby

Next on the list is Shalby.

Shalby operates a chain of multi-specialty hospitals across India. It offers tertiary and quaternary healthcare services to patients in various specialisation such as orthopaedics, complex joint replacements, cardiology, neurology, oncology, renal transplantations, etc.

The company is the leader in knee replacement surgery and one of the top Indian hospitals in joint replacement surgery.

Coming to its financial performance, Shalby's sales and net profit have grown at a CAGR of 15% and 21% in the past 5 years.

The ROE and ROCE have averaged 6% and 9% during the same period.

For its international business, the company has tie-ups with NHIF (Kenya), Middle East insurers, and health ministries in Ethiopia, Iraq, Uzbekistan, Tajikistan, and is in talks with Malawi, Mauritius, Zambia.

It also has partnerships with major medical tourism agencies, especially in Delhi NCR.

The management remains optimistic on its revenue growth, margin improvement, and implant business scale-up in FY26.

It is focused on clinical excellence, international patient inflow, and operational efficiency.

#5 GPT Healthcare

Last on the list is GPT Healthcare.

GPT Healthcare operates as a key regional corporate healthcare provider in Eastern India under the ILS Hospitals brand.

The organisation has established 5 multi-specialty hospitals with a capacity of 719 beds, supported by 91 full-time consultants and 570 visiting consultants.

Its existing 4 of 5 hospitals are owned (land at Salt Lake/Agartala on 99-year government lease).

While new projects (Raipur, Jamshedpur, 7th hospital) will be asset-light due to land market realities in target cities.

Coming to its financial performance, the company's sales and net profit have grown at a CAGR of 14% and 35% in the past 5 years.

The ROE and ROCE have averaged 22% and 28% during the same period.

For FY26, the company is targeting revenue of Rs 4.6 bn, a 15% growth.

It has provided a margin guidance of 22.5-23% by assuring confidence for mature its assets while Raipur could drag consolidated margins until it breaks even.

Overall, GPT Healthcare is well placed in the midst of a significant expansion, moving towards an asset-light model to achieve a 1,000-bed network across Eastern India.

Conclusion

Apart from healthcare tourism which has emerged in India due to its low-cost advantage over the years, here are few other reasons why hospital chains are set to ride this megatrend:

• Population growth and aging
• Urbanisation and lifestyle changes.
• Emerging infectious diseases and pandemics
• Healthcare technology advancements
• Government initiatives and policies

All that being said, if you are considering healthcare stocks, it's important to understand the risks associated with these firms.

While healthcare stocks may offer revenue stability, they are susceptible to market volatility, regulatory risks, and uncertainties in clinical trials.

Moreover, changes in healthcare policies and regulations can affect the financial performance of healthcare companies.

Carefully evaluate these factors, along with company fundamentals, corporate governance, as well as your financial goals and risk tolerance before making any investment decision.

Happy investing.

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