Free vaccination for all aged above 18 could lead to short term correction in private hospital stocks: Experts
Some private hospital stocks that can be in focus today include Apollo Hospitals, Fortis Healthcare, Max Healthcare Institute, Narayana Hrudayalaya, Shalby
June 08, 2021 / 09:47 AM IST
Some state-owned lenders have announced higher interest rates on deposits (Representative image)
Prime Minister Narendra Modi on June 7 announced free coronavirus vaccination for all aged above 18 under the programme which will be sponsored and executed by the central government.
The prime minister said the Centre, as part of the new vaccination strategy, would procure 75 percent of the vaccines, whereas, the private sector would be allowed to purchase 25 percent of the vaccines. Rs 150 can be the service charge imposed by the private sector for the overhead charges, he added.
According to experts, this is largely negative for private hospitals and could impact their profitability.
"Currently, a few private hospitals are charging between Rs 220 to Rs 270 as service charge over and above the vaccine procurement cost. "Hence, there is going to be a reduction of around 25 to 50 percent of the profit from vaccination. As a result, we may see some pressure in hospital stocks and these stocks might open lower on Tuesday morning," Gaurav Garg, Head of Research at CapitalVia Global Research told Moneycontrol.
Some private hospital stocks that can be in focus today include Apollo Hospitals, Fortis Healthcare, Max Healthcare Institute, Narayana Hrudayalaya, Shalby among others. Gaurav Garg feels the impact, however, maybe short term.
Investors should be cautious and should hold only those stocks which have good fundamental as the markets are at record high levels and valuation might be a concern.
Overall, the healthcare segment has been on investors' radar since the second quarter of 2020. In terms of stocks performance, Apollo Hospitals surged 163 percent in 2021 so far, Narayana Hrudayalaya gained 146 percent, Indraprastha Medical Corporation 145 percent, Max Healthcare Institute 74 percent, Fortis Healthcare 68 percent, and Shalby 18 percent.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.