Brokerages are bullish on Max Healthcare Institute Ltd.'s second quarter performance, as they note faster ramp up in new beds, healthy occupancy, and better-than-expected profitability.
Citi and Jefferies have maintained a 'buy' rating on the stock, with a price target of Rs 1,240 and Rs 1,260, respectively implying an upto 46.5% upside to the last closing price.
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Citi viewed Max Healthcare's Q2 performance as strong, with EBITDA coming in around 4% ahead of estimates, supported by healthy volume growth and a sharp sequential margin recovery despite the continued drag from oncology revenues.
The brokerage pointed out that the EBITDA beat highlights operating leverage from higher occupancy and the ramp-up of recently commissioned beds.
"Growth was driven by a 13% increase in occupied bed days and an 8% improvement in ARPP to Rs 231,000, partly offset by the impact of discontinuing select high-value chemotherapy drugs for institutional patients," Citi underscored.
Going ahead, the continued ramp-up of Max Smart, Nanavati-Max, Mohali, Lucknow and Bhubaneswar, along with growth in international patients, improving payer mix and normalization of the oncology business, should support earnings growth through FY27-FY28E, according to Citi.
The brokerage is also positive on the company's execution track record, expansion pipeline and high-return mature asset base.
Jefferies has also maintained a 'buy' rating on Max Healthcare Institute noting higher-than-expected Ebitda and net profit, even as revenue met expectations.
The brokerage highlighted that New beds are ramping up faster, reflecting strong demand and capacity absorption and occupancy remained healthy, supported by higher occupied bed days.
Revenue per occupied bed growth supported overall performance, Jefferies pointed out, with Max Labs and Max Home maintaining strong growth momentum.
Max Healthcare Q2 FY27 Recap
Max Healthcare announced second quarter results of fiscal 2027 on Friday, October 30. The company's net profit fell 15.5% to Rs 415 crore in the July to September quarter of the current financial year from Rs 491 crore in the corresponding period last year.
Revenue rose 20.3% to Rs 2,569 crore from Rs 2,135 crore, while EBITDA increased 23.8% to Rs 712 crore from Rs 575 crore. EBITDA margin improved to 27.7% from 26.9%. The company approved a capex of Rs 190 crore for two hospitals and revised the project cost for its Gurugram facility to Rs 1,143 crore.
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