KIMs stock surges 6%, Narayana Hrudayalaya tanks 3% after HSBC initiates coverage

HSBC picked Apollo Hospitals as its preferred 'buy' within the hospital sector.

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26 Aug, 2025 12:21

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Brokerage firm HSBC initiated coverage on three hospital stocks- giving a 'buy' call to Krishna Institute of Medical Sciences (KIMS) and 'reduce' ratings for Global Health and Narayana Hrudayalaya.

While the positive outlook for KIMS lifted the stock up around 6 percent in trade, caution for Narayana Hrudayalaya dragged it 3 percent lower on the NSE. Global Health shares however, remained largely muted.

HSBC's optimism for KIMS is based on its strong track record of operational excellence in key markets and its affordable healthcare model. While the brokerage estimates a profit CAGR of 26 percent for KIMS over FY24-27, driven by bed additions and volume growth, while keeping an eye on new hospital openings in Mumbai, Nashik, and Bengaluru. HSBC set a price target of Rs 3,000 for KIMS, suggesting a 10 percent upside from current levels.

In contrast, HSBC projects a 10 percent and 27 percent downside for Global Health and Narayana Hrudayalaya, with price targets of Rs 990 and Rs 1,000, respectively. Caution for Global Health stems from concerns over challenges in the Lucknow market, that for Narayana is triggered by expectations of a margin pressure in the near term.

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HSBC believes that the current stock price of Global Health does not adequately capture challenges that it might face in its key Lucknow market as there exists execution risks for new hospitals. On the other hand, HSBC anticipates Narayana Hrudayalaya to face considerable margin drag due to costs associated to its new hospital in Cayman Islands. "Benefits from current initiatives are likely at least two-three years away," HSBC wrote in a note.

Despite it all, HSBC picked Apollo Hospitals as its preferred 'buy' within the sector, also raising its price target to Rs 7,720, offering a 9 percent upside from current levels.

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