Shares of Max Healthcare Institute Ltd. jumped nearly 5 percent in intraday trade on Monday after brokerage firm Motilal Oswal initiated coverage on the stock with a ‘BUY’ rating. Motilal Oswal also gave a price target of Rs 530 on the Max Healthcare stock, implying an upside of 23 percent from its previous close of Rs 430.60 on Thursday.
In its research report dated April 6, the brokerage firm said that Max Healthcare has a proven track record of improving the profitability of its hospitals and is leading its peers across operational parameters.
The report added that Max Healthcare has a substantial land bank in existing locations, which enhances its growth prospects over the next 3-5 years.
Motilal Oswal said it expected Max Healthcare to deliver a compounded annual growth rate (CAGR) of 16 percent in terms of revenue and 17 percent in terms of EBITDA over the fiscal years 2023-25.
The growth should primarily be led by factors such as a fall in the share of institutional patients, a higher number of international patients driven by a strong brand recall, and the company’s ongoing cost management measures.
“The roadmap of more than doubling its operating beds over the next five years remains on track largely due to strong internal accruals. The inorganic initiative would also be another potential driver of earnings growth, given its strong turnaround capability,” Motilal Oswal said in its report.
The brokerage firm also mentioned that Max Healthcare’s pathology business MaxLab should see a 20 percent sales CAGR to Rs 160 crore over the fiscal years 2023-25 with geographical expansion and better traction in existing centres.
The company’s other segment Max@Home, a platform that provides health and wellness services at home, is also expected to see 16 percent sales CAGR to Rs 180 crore over the fiscal years 2023-25 considering its comprehensive service offerings.
Max Healthcare Institute is a leading healthcare service provider, with major concentration in North India. The network comprises 17 hospitals owned and managed by the company.
Shares of Max Healthcare are trading 3 percent higher at Rs 443.25.
