Max Healthcare shares gain 3% as UBS upgrades to 'buy', sees 18% upside

Max Healthcare's share price has fallen 8 percent since the start of the year.

Shares of Max Healthcare gained over 3 percent to Rs 1,047 in morning deals on February 18, extending gains for a third session in a row, followed by an upgrade from UBS, which raised its rating on the stock from ‘Neutral’ to ‘Buy’ and increased the target price to Rs 1,200.

With a price target of Rs 1,200, the international brokerage implies an upside potential of 18.3 percent from the last close of Rs 1,014 on the National Stock Exchange. UBS analysts stated that the company is well-positioned for robust earnings growth, supported by solid foundations.

Follow our LIVE blog for all the latest market updates

Analysts suggest that Max Healthcares' plan to double its bed capacity within the next three years is expected to further enhance its growth prospects. UBS also emphasized that Max’s asset-light model sets it apart as a leader in the healthcare sector.

The brokerage firm believes the market has yet to fully appreciate Max Healthcare’s strong visibility regarding bed additions, which it considers a significant catalyst for the company’s valuation. UBS also highlighted the hospital chain’s remarkable ability to swiftly ramp up occupancy rates and achieve break-even with efficiency.

Also read: Kinara Capital hit by NBFC stress: Breaches loan terms, plans stressed asset sale

For the third quarter, Max Healthcare reported a 17.4 percent year-on-year decline in net profit, which stood at Rs 238.80 crore compared to Rs 289.3 crore in the same period last year. However, the company's revenue grew by 39.9 percent year-on-year, reaching Rs 1,868.3 crore, up from Rs 1,334.97 crore in the third quarter of FY25. On a quarter-on-quarter basis, Max’s net profit fell by 15.2 percent, while revenue increased by 9.4 percent, rising from Rs 281.8 crore and Rs 1,707.5 crore in Q2FY25, respectively.

Read more: Weak economy sees sales growth slips to 5-quarter low, but operating profit surges at fastest pace in 3 quarters

At about 11:30 am, shares of the company were trading at Rs 1,028, higher by 1.4 percent from the last close on the NSE. Max Healthcare's share price has fallen 8 percent since the start of the year.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.