Buy Max Healthcare Institute Ltd For Target Rs. 1,315 - Axis Securities Ltd
Expansion Accelerates; Profitability Strengthened
Est. Vs. Actual for Q4FY25: Revenue: INLINE; EBITDA Margin: INLINE; PAT: INLINE
Changes in Estimates post Q4FY25
FY26E/FY27E: Revenue: 1.4%%/0.3%; EBITDA Abs: 3.6%/2.6%; PAT: 4.7%/4.4%
Recommendation Rationale
Strong Revenue Growth Driven by New Hospitals: Max Healthcare reported revenue of Rs 2,326 Cr, in line with expectations, supported by steady ARPOB and contributions from new hospitals, despite a marginal drop in occupancy.
Stable ARPOB and Improved Occupancy: ARPOB stood at Rs 77,100, remaining flat YoY (Existing units +7% Growth YoY), while occupancy improved to 75% (up 300 bps YoY on a like-to-like basis), driven by a 30% YoY growth in occupied bed days.
EBITDA Margins and Profitability: EBITDA margins remained stable at 26.4% over the year, despite the addition of new assets. PAT was Rs 376 Cr, reflecting a 21% YoY growth driven by operational efficiencies and cost control.
Sector Outlook: Positive
Company Outlook & Guidance: Max Healthcare’s revenue mix remains well-balanced, with continued growth in institutional and international patient segments. The recent increase in institutional business share is expected to stabilise as higher-value payer segments expand. The short-term margin impact from new hospital ramp-ups is expected to ease as these facilities scale their operations gradually. Lucknow, Noida, and Nagpur are expected to see further profitability expansion, supported by higher occupancy rates and the introduction of new clinical programs.
Current Valuation: EV/EBITDA 35x for FY27E EBITDA (Earlier Valuation: EV/EBITDA 35x)
Current TP: Rs 1,315/share (Earlier TP: Rs 1,315/share)
Recommendation: BUY
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SEBI Registration number is INZ000161633
