Max Healthcare share price gains more than 1% as Lucknow acquisition improves growth and earnings prospects
- Stock market Today- Max Healthcare announcement on Lucknow acquisition is looked positively as it fuel its earnings prospects . The acquisition remains attractive and there is further scope for growth and profitability improvement of acquired assets, said analysts
Max Healthcare Institute share price gained more than 1% in the opening trades on Monday. The stock remains in focus having announced share purchase agreement for acquisition of Sahara Hospital, in Lucknow.
The development is considered as important as Apollo Hospitals Enterprise and Medanta ( Global healthcare ) have already established their presence in Lucknow and have been seeing good growth. The move by Max Healthcare therefore is likely fuel growth and is being perceived positively by analysts.
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Considering the performance of Medanta and Apollo Hospital in Lucknow, we assume Max to achieve Ebitda margin of 30% over the next 12-18 months.” said analysts at Motilal Oswal Financial Services Ltd. Ebitda stands for Earnings before Interest tax depreciation and amortisation.
Also, the fact that with just an incremental investment of ₹150-200 crore, the capacity can be increased to 550 beds from the current operating capacity of 250 beds as per analysts estimates. Thus Max Healthcare can reap further benefits.
Hospital has the potential to quickly ramp up beds in existing building and expand medical programs like Oncology, Transplants, Robotics, etc, said Max Healthcare. The Hospital is situated on a land parcel of ~27 acres at Gomti Nagar, Lucknow and has a built-up area of ~82,673 sqm. spread across 17 floors. The revenue run rate for the facility being acquired stands at ₹200 crore per annum.
As the move is positive for the forward earnings prospects, the hospitals already remain in sweet spot with strong pick-up occupancy, rising number of in patents, rising insurance penetration, rebound in medical tourism and expansions being undertaken by them to cater to strong rise in demand. Max Healthcare Share price has already risen more than 55% in last one year.
The forward earnings outlook remains improved and post Lucknow acquisition analysts at Motilal Oswal Financial Services have raised their earnings estimates by 3% for FY25 to factor in the acquisition). They value Max Healthcare on the Sum-of-the-parts basis ( to arrive at a target price of ₹780. This acquisition should help Max Healthcare gain foothold in Lucknow and surrounding districts and give ample land availability to expand at a single location, said analysts. Further, the scope of growth/profitability improvements makes the acquisition attractive
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisionso Read
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