Manipal Hospitals’ aggressive acquisition strategy is now entering the payoff phase. Jefferies initiated coverage on the hospital chain with a Buy rating, saying its scale, geographical reach and ability to improve acquired assets could drive a 46% compound annual growth rate in profit through FY29.The brokerage set a price target of Rs 870, implying 21% upside from the stock’s previous closing price of Rs 718.40. It expects Manipal’s revenue and EBITDA to grow at compound annual rates of 17% and 19%, respectively, between FY26 and FY29.Manipal Health shares were trading 2% higher at Rs 743.90 on the BSE this morning. Jefferies refers to Manipal as the “third-largest hospital chain” in India, with an owned bed capacity of 9,355. It is also the only private hospital chain with leadership in three of India’s eight major metros, according to Jefferies.Also Read | Manipal Hospitals to consider acquisitions in areas of interest, geographic expansionThe Rs 9,000 crore acquisition strategyOver the past five years, Manipal has made five major acquisitions, deploying an estimated Rs 9,000 crore to acquire 5,548 licensed beds.The acquisitions include Columbia Asia and Vikram Hospitals in Bengaluru in FY22, AMRI in FY23, Medica Synergie in FY25 and Sahyadri Hospitals in Pune in FY26.The acquisitions helped Manipal enter markets such as Kolkata and Pune while strengthening its presence in Bengaluru. The Sahyadri transaction was the largest, involving an enterprise value of Rs 63 billion and 1,606 licensed beds.Jefferies’ bullish view rests on Manipal’s ability to replicate its integration playbook across these assets. The process involves standardising clinical protocols, increasing focus on high-acuity services, upgrading infrastructure and equipment, centralising procurement and imposing more disciplined operating practices.The brokerage said this approach had helped Manipal scale Columbia Asia, Vikram and AMRI while improving the profitability of the acquired assets. The same strategy is now being deployed at Medica Synergie and Sahyadri.Sahyadri is the immediate earnings triggerSahyadri is central to the investment case. Manipal acquired the Pune-based hospital chain in October 2025 to establish leadership in Pune and strengthen its footprint across the Pune-Mumbai economic corridor.At the time of acquisition, Sahyadri’s occupancy was estimated at about 60%. That increased to 62.6% in the first quarter of fiscal 2027, while average revenue per occupied bed rose about 15% to Rs 44,800 a day.In the quarter, Sahyadri’s revenue rose about 13% from a year earlier and 12% sequentially to Rs 3.32 billion. EBITDA increased 19% year-on-year and 61% sequentially to Rs 580 million.Jefferies expects the turnaround to support 20% revenue growth and 32% EBITDA growth for Manipal’s Maharashtra and Goa cluster between FY26 and FY29.The company’s integration plans for Sahyadri include centralised pricing, better outpatient-to-inpatient conversion, service improvements, rebranding, digital revenue initiatives and an improved case and payor mix. Manipal is also using its doctor-consultant network to reduce doctor costs and improve profitability.The brokerage identified improved profitability at Sahyadri as one of the company’s key near-term catalysts.Beds, utilisation and operating leverageManipal plans to add about 2,426 beds between FY26 and FY30, equivalent to roughly 26% of its current capacity. Around 1,943 beds, or 80%, will be greenfield additions, while 483 will be brownfield beds.The new capacity will be concentrated in markets where Manipal already operates, including Karnataka and Maharashtra. Planned additions include 603 beds in Mumbai, 475 in Wakad, Pune, 360 in Raipur, 265 in Electronic City, Bengaluru, and 240 in Budigere, Bengaluru.Jefferies expects these additions, along with growth in existing hospitals, to lift revenue to Rs 167 billion by fiscal 2029 from Rs 103 billion in fiscal 2026.The company’s occupancy stood at 64%, below the levels of some leading peers cited in the report. Jefferies believes this leaves room for earnings growth through better asset utilisation and higher patient volumes.It expects EBITDA margins to expand by 140 basis points to 26.6% over fiscal 2026-29, supported by scale benefits and the Sahyadri turnaround. Lower finance costs following debt repayment from IPO proceeds are expected to help drive the projected 46% PAT CAGR.Geographical diversification is another part of the thesis. Karnataka contributes about 44% of revenue, Maharashtra and Goa about 16%, and East India about 21%. Jefferies expects Karnataka to benefit from premiumisation, while East India should see volume-led growth and Maharashtra and Goa should be driven by higher occupancy at Sahyadri.Valuation and risksManipal trades at 31 times and 26 times estimated fiscal 2027 and fiscal 2028 EV/EBITDA, respectively. Jefferies values the company at 29 times September 2028 EV/EBITDA for its Rs 870 target, compared with an industry average of 28 times.The premium is justified, according to the brokerage, by Manipal’s scale benefits and expected 19% EBITDA CAGR, ahead of the 17% growth expected for peers.However, the report flagged two key risks: weaker-than-expected execution could delay the improvement in Sahyadri’s profitability, while intensifying competition in Bengaluru could pressure growth and margins.For Jefferies, the core thesis is that Manipal’s acquisition-led expansion is moving from balance-sheet deployment to operating leverage. If the company can reproduce its past integration successes at Sahyadri and other recently acquired hospitals, the brokerage believes the platform has scope to narrow its operational gap with the best-performing hospital chains.Disclaimer: This article has been written by Nikhil Agarwal, who is not a SEBI-registered Research Analyst or an Investment Adviser. Nikhil Agarwal and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here