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On Thursday, HSBC analyst Damayanti Kerai increased the price target on Max Healthcare Institute Ltd (MAXHEALT:IN) shares to INR 1,055 from INR 1,010, while retaining a Hold rating on the stock. The adjustment follows the company’s recent financial performance and the potential growth trajectory of its new units.
Kerai highlighted Max Healthcare’s strong execution record and its ability to quickly turn around new hospitals. The recent success of the Dwarka unit was noted, along with the company’s strategy of serving a diverse patient base, including cash, third-party administrator (TPA), and international patients, as well as those under various health schemes.
The analyst pointed out that the rapid ramp-up of new facilities and the consistent addition of beds are crucial for sustaining revenue growth. However, Kerai believes that the current share price already accounts for the growth expected from bed expansion and, as a result, sees limited potential for a re-rating of the stock. This view is based on the anticipation that the evolving mix of new and mature beds over the next 3-4 years will likely lead to only a modest improvement in key performance indicators such as Average Revenue Per Occupied Bed (ARPOB) and the payor profile.
Following the fourth-quarter financial results for the fiscal year 2025, HSBC updated its estimates for Max Healthcare for fiscal years 2026-2027 to reflect the expected growth trajectory of the company’s newer units, particularly in Noida, Dwarka, Lucknow, and Nagpur. The revised forecasts include a slight decrease of 1.1% in the FY26 proforma earnings per share (EPS) estimate and a 3.1% increase in the FY27 EPS estimate.
Kerai’s revised target price implies a 7.6% downside, suggesting that while the analyst acknowledges Max Healthcare’s ability to consistently grow the profitability of its new units, particularly in Noida, Lucknow, and Dwarka, the current valuation limits the potential for an increase in the stock rating.
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