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Seasonality on account of extended summers and holiday season impacted the operating matrix of hospitals under our coverage in Q1 FY24. While their business model is prone to such cyclicality, companies were able to safeguard their average revenue per occupied bed while occupancy took a slight hit.
Reduction in count of surgeries due to holidays and delayed monsoon impacted overall performance.
Hospitals remain on track to improve their occupancies and margins. Despite the slowdown in Q1, network expansion plans remain unchanged and hospital chains are diligent in adding further beds through merger and acquisitions or brownfield capex.
Surge in non-Covid volumes for diagnostics took a pause due to seasonality. Competitive pressure in the diagnostics biz is easing out as most online competitors are now eyeing profitable growth while listed companies too are taking price increase (2-4%) in selective tests.
Our top picks in the space are Fortis Healthcare Ltd. and Dr. Lal Pathlabs Ltd.
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