Max Healthcare gets new 'Buy' call from Nuvama; target hints at new high

Nuvama assigned a target price of ₹1,430 per share for Max Healthcare stock, a potential upside of 25 per cent from the previous close

Nuvama Institutional Equities initiated a 'Buy' coverage on Max Healthcare Ltd., citing a "strong" volume-led growth ahead, maintaining its leadership in competitive micromarkets. 

 

The brokerage assigned a target price of ₹1,430 per share on the hospital firm, a potential upside of 25 per cent from the previous close. 

 

North India's largest private hospital chain is ready for strong volume-led growth as its capacity nearly doubles to about 9,400 beds by the financial year 2029, Nuvama said in a report on September 9. With about 70 per cent of additions to be brownfield, visibility of profitable growth is high. 

 

The brokerage forecasts a 20 per cent revenue CAGR over FY2025-28, driven by a 15 per cent growth in existing hospitals through bed additions and 6 per cent ARPOB growth, ramp-up of four new hospitals in Dwarka, Noida, Lucknow and Nagpur and greenfield projects in Gurgaon Sector 56 and Mohali. 

 

Max Healthcare plans to invest about ₹6,500 crore over four years, funded via strong annual operating cash flow, causing no stress on the balance sheet, Nuvama said. About 70 per cent of this would be brownfield, enabling faster occupancy and quicker breakeven, backed by its track record, one-month breakeven at Shalimar Bagh, six-month at Dwarka, it said. "Despite expansion, Ebitda margins are likely to hold at 27-28 per cent."

 

The brokerage said that the company would maintain its leadership in competitive micromarkets owing to a tech-led approach driving clinical outcomes and talent retention. "This, coupled with a strong balance sheet, healthy cash flow (funding capex) and industry-leading returns, fortifies confidence in Max’s long-term growth story."

 

Despite several private players, high occupancy across organised hospitals suggests ample room for expansion, according to the domestic brokerage. In key micro-markets such as Gurgaon, Noida and North West Delhi, Nuvama said that intensifying competition may temporarily affect costs due to talent churn. "However, Max remains well-positioned, driven by tech-led clinical outcomes and strong retention." 

 

Expansion delays, rising competition and doctor attrition, pressure from insurers are key risks to Nuavama's views on Max Healthcare.

 

Max Healthcare share price 

The hospital chain's stock fell as much as 0.8 per cent during the day to ₹1,140.4 per share, the lowest level since June 6 this year. The stock pared losses to trade 0.35 per cent lower at ₹1,145 apiece, compared to a 0.36 per cent advance in Nifty 50 as of 1:55 PM. 

 

Shares of the company fell for the second straight session. The counter has risen 1.6 per cent this year, compared to a 5 per cent advance in the benchmark Nifty 50. Max Healthcare has a total market capitalisation of ₹1.11 trillion.