On Friday, HSBC adjusted the price target for Max Healthcare Institute Ltd (MAXHEALT:IN), increasing it to INR930.00 from INR850.00. The firm sustained its Hold rating on the healthcare provider's stock. The revision follows the company's recent financial results and takes into account the expansion plans Max Healthcare has in place.
Kerai highlighted Max Healthcare's strong performance indicators and execution record as positive factors. However, the analyst expressed caution regarding the company's profit margins due to the significant number of beds expected to be added to its network over the next three to four years. According to the analyst, the current share price already reflects the anticipated growth from bed expansion, suggesting that there may be limited potential for an increase in the stock's rating.
Following the second quarter financial year 2025 results, HSBC updated its forecasts for Max Healthcare, incorporating the impact of new units, particularly the Jaypee Noida facility, and the associated operating costs. These adjustments have led to an increase in revenue estimates by 1.7% to 6.3% for the financial years 2025 to 2027 and a decrease of 5.9% in the expected earnings per share for network operations in the financial year 2027.
The new target price of INR930 from the previous INR850 reflects HSBC's application of a higher enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 34 times. This valuation change is based on the latest financial data and the strategic developments within Max Healthcare.
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