This Stock To 'Buy' For 18% Upside, Target Price Of Rs. 430: HDFC Securities

Target Price

The Current Market Price (CMP) of Max Healthcare is Rs. 364. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 430. Hence the stock is expected to give an 18% return, in a Target Period of 1 year.

Company performance

Max's Q2 proforma EBITDA came broadly in line with ~Rs. 3.2-3.3bn, led by the all-time-high ARPOBs and strong volumes on the back of robust traction in non-Covid business. Adjusting for the Covid vaccine (Rs. 0.9bn), the company's hospital revenue increased ~8% QoQ to Rs. 12.1bn, led by all-time-high ARPOBs (+15% QoQ). On the other hand, Lab revenue came in at Rs. 220mn (-39% QoQ), as Covid business plunged ~80%. However, the non-Covid business grew at a healthy pace (+18% QoQ).

Comments by HDFC Securities

According to HDFC Securities, "Despite the aggressive expansion plans, we expect post-tax RoCEs to stay at ~ 18-23% levels through FY28E. We raise our estimates by ~1% for FY23/24E, to factor in encouraging overall outlook." The firms added maintaining the buy rating, "With a multitude of short and long term growth catalysts (recovery in international business, improvement in payor mix, and expansion plans), we expect Max EBITDA to grow at ~15% CAGR over FY22-FY28E."

About the company

Max Healthcare has hospitals across locations like Delhi / NCR, Punjab, Uttarakhand, Maharashtra. The healthcare company has major departments in their hospitals namely Cancer Care / Oncology, Cardiac Sciences, Liver Transplant and Biliary Sciences, Orthopaedics & Joint Replacement, Neurosciences, Gastroenterology, Hepatology & Endoscopy, Thoracic Surgery, Laparoscopic / Minimal Access Surgery, etc.

Disclaimer

The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.