Delhi government stake sale, key re-rating trigger. Interaction with the management suggested that the promoters are in discussions to buy part/entire stake from the Delhi government (which holds 26%). We believe that, if the transaction goes through (though timelines are uncertain), it would open larger avenues for growth in existing (the NCR) and newer regions.
350-bed addition, total at 1,150 by mid-CY28. In line with the industry’s bed capacity expansion, Indraprastha is also expanding (currently 802 beds) at its present site in Sarita Vihar (Delhi), with 350 beds likely to commence by midCY28 at an estimated Rs5.8bn. ~40% of the project cost is likely to be incurred in FY26, the balance in FY27 and FY28. Capex/bed is higher for this site as the company is building two underground floors for parking (~1,300 cars, 350+ two-wheelers) for ~Rs1.8bn). The intent is to take bed capacity to ~1,800 at a single site, making it probably the biggest in bed capacity at a single site.
SC order to scrutinise EWS not likely to dent earnings. The Supreme Court, in Mar’25, ordered the Central and Delhi governments to send a joint team of experts to inspect the company’s records of the last five years to find out if it fulfilled its commitment to provide free treatment to 30%/40% of in/outdoor patients. At our discussion, management said it has provided the necessary details and has pleaded to bring it down to 10%/25% IPD/OPD. It further said that, if this is through, there is a significant scope for margin betterment (due to a better payor mix). The next hearing is on 30th Jul’25.
Outlook, Valuation. Management aims to more than double bed capacity at the present site from 802 to 1,800+ (1st phase of 300-350 beds by mid-CY28). Further, with the new Government coming in Delhi should augur well for the company as it can expedite Delhi government’s stake sale to the promoters (can be an option value). We broadly maintain our estimates for FY26/27e and BUY rating on the stock with an unchanged TP of Rs590 (16x FY27 EBITDA).
