Hospital Valuations: Why Such a Discrepancy? 🤔 The Intriguing Story of Listed vs. Unlisted Hospitals!
Indian hospital stocks have seen a tremendous surge in the past two years. But why are unlisted hospitals so undervalued? 😲 Let's delve into this fascinating gap and how it impacts investment strategies!
Hello everyone! Today, I want to share some exciting news with you. Recently, I've been reading articles about hospital valuations in India, and wow, they're filled with truly intriguing stories! 🤩
Listed Hospital Stocks Soar! But...
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Firstly, Indian listed hospital stocks have recorded an astonishing growth in the last two years. They've delivered robust returns to investors, significantly outperforming the broader market. 📈
However, here's where an interesting point emerges: unlisted hospitals are still trading at a considerable discount. This means that even for the same type of hospital, there's a significant difference in valuation based on whether it's listed or not.
The Widening Gap: What's the Reason?
So, why is this gap widening? According to Indium Capital's Indium Hospitals Index, listed hospital chains are valued at approximately 30-31 times EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Looking closer, premium hospitals with an Average Revenue Per Occupied Bed (ARPOB) of ₹60,000 to ₹80,000 are fetching 34-35 times EBITDA. On the other hand, mid-tier hospitals with ARPOB levels of ₹30,000 to ₹50,000 are valued at around 27 times EBITDA.
What is an EBITDA Multiple?
The EBITDA multiple is an indicator of a company's overall business performance and is usefully employed by investors to determine if a company's value is fair or undervalued. It's particularly crucial when evaluating companies for mergers and acquisitions (M&A). 🧐
What Does This Discrepancy Indicate?
This difference in valuation significantly influences how Private Equity firms and strategic buyers are currently approaching the hospital sector. The high valuations of listed hospitals can be seen as evidence of their attractiveness as investment targets in the market.
At the same time, however, many investors are likely keeping a close eye on still-undervalued unlisted hospitals. It will be interesting to observe what M&A and investment activities become active through this gap. 😉
What are your thoughts on this news? What do you expect will be the outcome of these differences in hospital valuations moving forward? Please share your thoughts freely in the comments below! 👇
I hope today's news provided you with interesting insights. I'll continue to bring you various stories about health, the economy, and our lives. Have a wonderful day! 😊