Motilal Oswal Initiates BUY On Healthcare Stock, Likely To Give Up To 18% Return

Motilal Oswal has come up with a "Buy" on Max Healthcare Institute Ltd, a healthcare sector company engaged in Hospital & allied services. The brokerage initiates Buy with a target price of Rs 530/share. The stock is likely to give up to 18% positive return if purchased at the current market price. This is a midcap stock having a market capitalisation of Rs 43,638.88 crore.

Stock's Current Market Price, 52-Week Low/High, Returns

The stock of Max Healthcare is currently trading at Rs 448.80/share, up 4.24% from the previous close. Its 52 week high is recorded on 2 November 2022 at Rs 482.80/share, and 52 week low on 6 April 2023 at Rs 344.20/share, respectively.

The stock has given 3.72% positive return in 1 week, however, it declined 1.96% in 1 month. In the past 1 year, it has given 24.29% positive return. The stock was listed on 21 August 2020. Since its listing, it has given 302.42% positive return.

Better profitability and bed additions to drive growth; Initiate with a BUY

Motilal Oswal said, "The optimization of payor mix/cost is expected to drive 16%/17%/20% Sales/ EBITDA/PAT CAGR to INR77.4b/INR21.5b/INR15.7b over FY23-25. Given its proven skillset to improve return ratios of the hospital business, strong brand franchise in patients fraternity, metro-focused approach and enough land bank (to aid bed additions), we assign a 20% premium to its hospitals business and ascribe 23x EV/EBITDA v/s industry average of 19x on a 12M forward basis."

It added, "The diagnostics industry has huge tailwinds due to: a) rising needs for diagnostic tests, and b) increased awareness to perform preventive healthcare tests. However, MaxLab has a relatively smaller base than other large diagnostic chains such as DLPL and Metropolis. Therefore, for the MaxLab business, we assign a 15x EV/EBITDA multiple v/s peer average of 23x on a 12M forward basis."

It further added, "Max@Home business is in a growing stage in the Indian Healthcare industry. Thus, we assign a 2x EV/Sales multiple on a 12M forward basis considering the high level of technology adoption in metro cities, which will drive the business. Consequently, we arrive at our TP of INR530 based on SOTP valuation. We initiate coverage on the stock with a BUY rating."

Disclaimer - The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.