Buy Max Healthcare; target of Rs 650: Motilal Oswal

Motilal Oswal's research report on Max Healthcare

Max healthcare (MAX) reported a miss on earnings for 1QFY24, primarily due to increased opex. Having said this, MAX has been on track to enhance ARPOB on the back of increased high end treatment and a greater proportion of international patients. Additionally, with the growing demand for healthcare services MAX’s focal cities, we expect occupancy to improve moving forward. We maintain our earnings estimate for FY24/FY25. We value MAX at 25x EV/EBITDA to arrive at a price target of INR650 on 12M roll-forward basis. While better realization and improving operational efficiency are the major factors driving 21% earnings CAGR over FY23-25, it is implementing efforts for bed additions (780 beds; 23% increase from current bed size) to growth momentum over the next three to five years. It continues to evaluate the inorganic opportunities as well. We reiterate our BUY rating on the stock

Outlook

We maintain our earnings estimate for FY24/FY25. We value MAX at 25x EV/EBITDA to arrive at a price target of INR650 on 12M roll-forward basis.

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