Max Healthcare Q3 Results Review - Improved Realisation Led To Growth In Earnings: Motilal Oswal

Motilal Oswal Report

Max Healthcare Institute Ltd. delivered in-line Q3 FY24 performance. Despite Q3 being a seasonally weak quarter, the company had exhibited healthy mid-teens (15%) growth in both revenue and Ebitda.

The Ebitda per bed continues to inch up, backed by payor mix/case mix optimization. The company remains on track with its bed expansion initiative.

We raise our earnings estimate by 2%/4%/4% for FY24/FY25/FY26, factoring in-

1. improved average revenue per occupied bed across institutional/international patients, and

2. better operational efficiency.

We also raise enterprise value/Ebitda multiple to 28 times (from 25 times earlier) on the back of-

1. superior execution across both – operating hospitals as well as building hospitals,

2. calibrated approach to drive profitable growth and deliver better-than-industry performance.

Accordingly, we value Max Healthcare on SOTP basis (28 times EV/Ebitda for hospital business, 20 times EV/Ebitda for Max Lab, sour times EV/sales for Max@home) to arrive at a target price of Rs 930.

We remain positive on Max Healthcare as it remains one of the leading hospitals delivering consistent growth in earnings, driven by a combination of increased patient base as well as optimizing patient realisation.

Further, the potential for adding hospitals in the next five years is substantial, given a significant portion of it being brownfield projects. Reiterate 'Buy'.

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