Can Park Medi World’s IPO deliver long-term returns for high-risk investors?

ET Intelligence Group: Park Medi World, a private hospital chain, plans to raise ₹770 crore through a fresh issue to repay debt and fund capital expenditure. It will also raise ₹150 crore through an offer for sale. The promoter group’s stake will fall to 82.9% after the IPO from 95.6%. It has continued to increase bed capacity over the past three years. Its operating margin before depreciation and amortisation (Ebitda margin) and average length of stay (ALOS) has declined marginally over FY23-25, but it is still above that of peers. It primarily operates in North India with over 70% revenue coming from Haryana, signalling geographic concentration. In addition, average revenue per occupied bed (ARPOB) remains below that of peers. Given these factors, investors with high-risk appetite may consider the IPO.

Business

Incorporated in 2011, Park Medi World is the second largest private hospital chain in North India and the largest private hospital chain in Haryana in terms of bed capacity as of March 2025. It operates 14 multi-super specialty hospitals under the ‘Park’ brand, offering over 30 super specialty and specialty services, including internal medicine, neurology, urology, gastroenterology, general surgery, orthopedics and oncology. Internal medicine speciality contributes over 30% to the total revenue. Though gross block per bed, which denotes the initial cost of a hospital’s fixed assets for each available patient bed, increased to ₹34 lakh crore in FY25 from ₹20.7 lakh in FY23, it continued to remain lower than ₹49 lakh-₹1 crore for peers. It also had a higher average occupancy of 68% in September 2025, compared with 51-66% for peers.

Financials
The company’s revenue grew by 5.4% annually to ₹1,393.6 crore between FY23 and FY25. Net profit declined to ₹213.2 crore in FY25 from ₹228.2 crore in FY23, owing to factors such as floods in Punjab that affected operations of hospitals in Ambala and Patiala and under-renovation hospital in New Delhi. Ebitda margin reduced to 26.7% in FY25 from 31.1% in FY23, yet remained above most peers, which is between 23-27%. For half year ended September 2025, Park Medi World’s revenue rose 16.9% year-on-year to ₹808.7 crore and net profit jumped 23.3% to ₹139.1 crore. Though ARPOB rose to ₹27,105 in September 2025 from ₹24,575 in FY23, it remains significantly below ₹32,000-₹66,000 for peers due to the company’s strategic focus on affordable hospital beds. ALOS declined to six days from seven days during the same period, but it was above its peers ranging between three-four days.

Valuation

Considering the post-IPO equity and profit for FY25, the price-to-earnings (P/E) multiple works out to be 33, compared with 49-70 for its peers including Narayana Hrudayalaya Yatharth Hospital & Trauma Care Services, Krishna Institute of Medical Sciences and Jupiter Lifeline Hospitals. Considering annualised profit for FY26, P/E comes to be 25, compared with 39-96 for its peers.