Buy Max Healthcare; target of Rs 1240: Motilal Oswal

Motilal Oswal's research report on Max Healthcare

Max Healthcare (MAXHEALT) has aggressively increased its bed capacity through both organic and inorganic routes over the past three years. Going forward, MAXHEALT plans to add 2,400 beds to its total bed capacity of ~6,700, with a capex of INR40-45b over the next 3-4 years. Despite heavy capex, the company has comfortably maintained its liquidity position. MAXHEALT has strategically expanded its presence in the UP market over the past six months and has established itself as a key player in this market.

Outlook

We value MAXHEALT on an SOTP basis (35x EV/12M forward EBITDA for the hospital business, 26x EV/12M forward EBITDA for Maxlab, and 6x EV/sales for Max@Home) to arrive at our TP of INR1,240. Reiterate BUY.