Buy Max Healthcare Institute Ltd For Target Rs. 1,355 By Prabhudas Liladhar Capital Ltd
Max Healthcare Institute (MAXHEALT) reported healthy EBITDA growth of 23% YoY to Rs 6.14bn; in line with our estimates. The company showed phenomenal growth with ~19% EBITDA CAGR over FY22-25. We expect pick-up in the growth momentum given 1) strong expansion plans (+3700 additional beds over FY25-28E), 2) improving payor mix and 3) Bolt on acquisitions like recently added in Lucknow, Nagpur and Noida. Operational efficiency has also been commendable, especially in competitive markets like NCR. Our FY26E/27E EBITDA remains unchanged and we expect EBITDA/PAT to grow ~2x over FY25-28E. We ascribe 36x EV/EBITDA based on FY27E. Maintain ‘BUY’ rating with TP of Rs. 1,355/share.
In line EBITDA, existing units EBITDA grew by 15% YoY:
Base business’s EBITDA improved 15% YoY while including Lucknow + Nagpur unit; EBITDA growth was 18% YoY. During Q1, total of 95 additional beds was commissioned largely in Dwarka and Noida facilities. New units which now comprise of Noida and Dwarka contributed EBITDA of Rs 270mn; up 19% QoQ. There were Rs120mn one time donation expenses. Overall margins declined by 80bps YoY and 220bps QoQ to 25%. Consol occupancies improved by 100 bps YoY and QoQ to 76%. ARPOB improved by 1% YoY and QoQ to Rs 78K. Existing units ARPOB which now includes Lucknow and Nagpur units came in at Rs80.9k; up 5% YoY.
Strong revenues across existing and new units:
Consolidated revenues came at Rs. 24.6bn (up 27% YoY); of which Rs.1.34bn, Rs. 1.1bn, Rs. 970mn and Rs. 550mn were contributed by Noida, Lucknow, Dwarka and Nagpur units respectively. Base business revenue growth was 13% while including Lucknow & Nagpur were at 16% YoY. Institutional revenue share was at 21.8% vs 20.8% in Q4. Max Lab and Max@Home revenue stood at Rs 480mn and Rs 600mn respectively. During Q1, net debt increased by Rs. 1.8bn QoQ to Rs17.6bn.
Key Conference Call Highlights:
- Bed Expansion plans- MAXHEALT targets adding ~1,000 brownfield beds and 500 greenfield beds in FY26. Trial runs started at a new brownfield tower of 160 beds in Mohali.
- Project updates: Nanavati (Phase 1 with 268 beds): commissioning of multiple floors in coming weeks. Max Smart (400 beds): interiors/MEP progressing; phase commissioning targeted by end-Q2 FY26. Lucknow (Phase 2): expanding from 413 beds to 520 beds by FY26E; 32 beds are ready; LINAC installation expected in early Sep’25. Sec56, Gurgaon (501 beds): structural/MEP underway; commissioning by FY26 end. Nagpur (100 beds): waiting for environmental clearance approval; 24-month completion post start. Patparganj (397 beds): post-EC, barricading/tendering in progress. MAX Vikrant (550 beds): pending tree-transplantation approval from Forest Dept; guided to start after Saket 400-bed commissioning. Zirakpur, Mohali (asset-light) 400 beds: approvals received; will take ~24 months to complete. Max Vaishali (Brownfield) 140 beds: demolition work is underway; guided ~30 months to complete. Thane (500 beds): master plan being finalized; drawings/submissions will be done by end-Q2 FY26. Pitampura, Delhi (250 beds): drawings submitted; will start construction post approvals.
- Dehradun (Built to suit lease, 130 beds): located at ~100 meters of distance from existing 220-bed unit of MAX (reported 80% occupancy in Q1); plans for oncology-focused (incl. radiation) and expected commissioning by 2028 end.
- Executed binding term sheet to divest Chitta (Bulandshahr) & Anoopshahr Hospitals for Rs 400mn; expected completion by Sep-2025. In Q1, Chitta delivered Rs 50mn of revenues with Rs 10mn of EBITDA loss.
- New units: Noida reported revenue growth of 14% YoY with 32% YoY EBITDA growth to Rs 230-240mn. Dwarka revenues improved 24% QoQ with Rs 70- 80mn of EBITDA. Lucknow reported revenue growth +97% YoY and EBITDA growth of +191% YoY. While Nagpur’s revenue growth was at +27% YoY and EBITDA growth in the same range (~27%).
- Oncology is ~25–26% of hospital revenue and rising structurally; radiation oncology at Lucknow and Dwarka is expected to commission in Q3 FY26, which should improve the oncology share further. Dwarka occupancy is already ~81–82% on operational beds.
- Consol ARPOB was flattish (up 1% YoY and QoQ) due to new/acquired units’ lower ARPOB; existing beds’ ARPOB was up ~7%. Guided ARPOB to increase as newer units ramp.
- Existing units delivered 26.2% margin; adjusted for a one-time Rs 120mn donation. New units contributed Rs 270mn EBITDA.
- In Q1, Capex deployment of Rs 4.35bn for expansion/upgrade; Rs 1.31bn for Vaishali land.
- International patient revenue was Rs 2.1bn, up 32% YoY, despite airspace closures and geopolitical challenges; accounts for 9% of hospital revenues.
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