Max Healthcare - Impressive Track Record, Robust Outlook To Sustain Re-Rating: Motilal Oswal

Motilal Oswal Report

Max Healthcare Institute Ltd. is currently trading at 24 times FY25E enterprise /Ebitda, representing a premium to its historical average of 22 times. Moreover, it is also trading at a premium to its hospital peers (21 times FY25E EV/Ebitda).

However, we expect Max Healthcare to continue trading at a premium on relative basis, backed by:

1. significant land bank availability in high-demand areas of Delhi for brownfield expansion,

2. focused approach to improve profitability per bed, and

3. proven capability of strong turnaround of hospital assets.

In fact, given strong demand tailwinds on account of-

1. increased insurance penetration,

2. higher international patient flow, and

3. enhanced healthcare awareness, we expect the valuation at the sector level to further improve going forward.

We reiterate 'Buy' with a target price of Rs 660, based on SOTP (25 times EV/Ebitda on 12 months forward basis for hospital business, 17 times EV/Ebitda for Max Lab business, and four times EV/sales for Max at Home business).

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