Max Healthcare to set up 450-bed hospital in Pune; shares rise up to 3%

Max Healthcare share price

The shares of Max Healthcare Institute jumped nearly 3 percent on December 18 after the company announced that its board has approved the proposal to acquire 100 percent stake in Pune's Yerawada Properties to build a super speciality hospital in Pune.

Max Healthcare shares hit an intraday high of Rs 1,060.90 apiece, snapping a two-session losing streak. The stock then pared some gains to close nearly 2 percent higher at Rs 1,048 per share.

Max Healthcare to acquire Yerawada Properties:

In an exchange filing released today, Max Healthcare announced that its board has approved the proposal to enter into a share purchase agreement for acquisition of 100 percent equity stake in Yerawada Properties Private Limited (YPPL), Pune, Maharashtra.

Max Healthcare said that the purchase of the equity stake will be carried out in a step-up manner, and the total cost of acquisition will roughly stand at Rs 200 crore. As part of the first tranche of the transaction, Max Healthcare will acquire 100 percent of the Class A equity shares representing 100 percent of the voting rights and approximately 50.22 percent of the economic interest in Yerawada Properties. "Further, the Company shall acquire 100% Class B Equity Shares in a phased manner over a period of ~4 years," it added.

"The purchase of equity stake shall be carried out in a step-up manner and shall conclude upon receipt of Occupancy Certificate for the hospital building planned to be constructed on the said land," it said. The acquisition is expected to be completed within 4 years.

Max Healthcare to set up 450-bed hospital in Pune:

Max Healthcare’s board has also approved the plan to spend up to Rs 1,020 crore to set up a super speciality hospital with 450-bed capacity on the land owned by Yerawada Properties. This would include the cost to acquire Yerawada's shares, construction, equipment cost, stamp duty, registration charges and more.

"The acquisition of YPPL will lead to expansion of Company’s footprint in Maharashtra by enabling setting up of a ~450 bedded hospital in Yerawada, Pune, a prime locality in the centre of the city," it said.

YPPL is engaged in real estate development business and owns 1.68 acres parcel of freehold land in Pune's Yerawada. "Pune, a thriving city with a large population and a growing middle class, is experiencing a surge in demand for quality healthcare services and the Company intends to expand its footprints in the territory. The hospital shall cater to the healthcare needs of population living in Pune and surrounding regions," Max Healthcare said.

Here's what Max Healthcare management said:

Speaking about the development, Max Healthcare Chairman and Managing Director Abhay Soi said, "Pune is one of India’s fastest-growing urban centers with a strong economic base and rapidly expanding middle-class population. There is a growing need for a high-end super speciality hospital equipped with state-of-the-art technology that Max Healthcare is renowned for."

He added that this proposed hospital will bring advanced medical care closer to patients in the region. "Our entry into Pune is a strategic milestone for Max Healthcare and aligns with our long-term vision of expanding our presence in key healthcare markets across the country. We see this as first amongst the few that we intend to establish in this market," Soi further said.

Max Healthcare share price history:

Max Healthcare shares have fallen more than 3 percent in the past five days, and over 6 percent in the past one month. The stock has tumbled over 11 percent in the past six months.

Its P/E ratio stands at 87.40.

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