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In Q2FY25, Max Healthcare saw a robust revenue growth of 23.3% YoY and 9.7% QoQ to INR 21,190mn led by an increase in the revenue from international patients which saw a growth of 12% YoY with a 9% share in the total hospital revenue. ARPOB grew by 6.8% YoY to INR 79,700 and occupancy at 81%. EBITDA grew by 15.7% YoY and 13.4% QoQ to INR 5,600mn. EBITDA margin contracted by 173bps YoY but marginally expanded by 84bps QoQ to 26.4%. APAT for the quarter grew by 3.3% YoY and 18.2% QoQ to INR 3,647mn.

* Jaypee Acquisition: Max acquired 63.65% of JHL’s equity on 4th Oct 2024 for INR 397.6cr, which is a 500-bed (376 operational beds) hospital. This acquisition will strengthen the presence of Max in the NCR region and is expected to drive strong revenue growth and seamless integration into the Max Network. It is planning to add 55 beds by FY25 and 50 beds by Q3FY26 in the existing facility. Max also plans to strengthen key medical programs including Urology, Medical Oncology, Gastroenterology & Neurosciences through a combination of external hires and internal infrastructure.

* The fastest break-even in the company’s history: Max commenced its operations at 303-bed greenfield hospital in Dwarka on July 2, 2024, and has clocked a revenue of INR 33cr with occupancy of 41% & ARPOB of INR 80k. At this moment, 141 of the 303 capacity beds are in use. By the end of March 25, the hospital should have about 200 beds available. The hospital is equipped with highend technology, 125 doctors, and around 480 medical staff. It is expected that this facility will break even by the end of FY25, which is going to be the fastest break-even of a greenfield facility in the entire history of Max. A few factors that will enable this fast break even are the location, infrastructure, underserved market, and the strong brand in the NCR region. Dwarka has excellent access to Delhi Metro, the international airport, and the soon-to-be-completed Dwarka Expressway Project. Additionally, this will offer access to Manesar and New Gurgaon.

* Max Lab and Home: During the quarter, Max Lab reported gross revenue of INR 47cr, with a growth of 21% YoY & 13% QoQ, serving across 50 cities with a network of over 1100 collection centers and active partners. Max@Home reported a gross revenue was INR 53cr, a growth of 24% YoY and 8% QoQ, which was driven by physio & rehab, critical care, and pathology sample collection. It offers 14 specialized services across 12 cities.

* Outlook & Valuation: Max is aggressively expanding its bed capacity through organic and inorganic ways and will continue to do that until FY27 by adding around 2,400 beds. Due to capacity expansion, the growth in ARPOB will be muted, and consolidated occupancy and EBITDA margin will remain impacted as Max is focusing more on high-end surgeries which results in a lower margin but higher EBITDA (absolute terms). We have introduced FY27E and valued the stock based on the SOTP methodology to arrive at a price target of INR 907 and recommend a SELL rating on the stock.

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