Max Healthcare - On An Expansion Spree: Motilal Oswal

Motilal Oswal Report

Max Healthcare Institute Ltd. has aggressively increased its bed capacity through both organic and inorganic routes over the past three years.

Going forward, the company plans to add 2,400 beds to its total bed capacity of ~6,700, with a capex of Rs 40-45 billion over the next three-four years.

Despite heavy capex, the company has comfortably maintained its liquidity position.

Max Healthcare has strategically expanded its presence in the UP market over the past six months and has established itself as a key player in this market.

We value Max Healthcare on an SOTP basis (35 times enterprise value/12 months forward Ebitda for the hospital business, 26 times EV/12 months forward Ebitda for Maxlab, and six times EV/sales for Max@Home) to arrive at our target price of Rs 1,240. Reiterate Buy.

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