Buy Max Healthcare; target of Rs 1360: Motilal Oswal

Motilal Oswal's research report on Max Healthcare

Max Healthcare (MAXH) reported in-line revenue and slightly better-thanexpected EBITDA in 2QFY26. The overall performance was robust, with consistent 20%+ YoY revenue growth and better or in-line EBITDA YoY growth. The bed addition on the brownfield basis is expected to help MAXH sustain the growth momentum going forward. For the existing units (network hospitals/facilities started before 3QFY25), revenue growth of 14.4% YoY was largely driven by patient volume, while EBITDA growth stood at 18.6% YoY. Pre-tax ROCE of the existing units is commendable at 26%. The scale-up of new units is also on track, with revenue/EBITDA growth of 8%/14% YoY in for the quarter. Free cash flow from operations (INR3b/INR7b) has been utilized for ongoing expansions and facility upgrades.

Outlook

We largely maintain our estimates for FY26/FY27/FY28. We continue to value MAXH on an SoTP basis (premised on 35x 12M forward EV/EBITDA for the hospital business, 30x 12M forward EV/EBITDA for Max@lab, and 11x EV/sales for Max@home) to arrive at our TP of INR1,360.