Apollo Hospitals, Medanta, Healthcare Global, Max Healthcare, Artemis Medicare: Check target prices, outlook

Antique Stock Broking expects the healthcare delivery market to grow at a healthy CAGR of 10-12 per cent, reaching Rs 12 lakh crore over FY25-30.

"We expect the share of treatments delivered by private providers to increase from 64 per cent in FY20 to around 69 per cent by FY30E. Between FY23 and FY26, the 15 hospitals in our sample added nearly 19,000 beds, taking the total bed capacity to over 70,000. Looking ahead, these hospitals are expected to expand capacity by 54 per cent to more than 108,000 beds over FY26-30E. We believe the sector's growth will continue to be driven by bed additions, supported by 4-5 per cent ARPOB growth. Notably, 63 per cent of the planned expansion is through brownfield projects, enabling faster breakeven and higher RoCE," the brokerage said.

"We remain positive on the hospitals sector, backed by a majority of expansion being brownfield, strong long-term growth visibility, improving operational efficiency, and healthy balance sheets. We are initiating coverage with a BUY rating on APHS (Apollo Hospitals Enterprise Ltd), MEDANTA (Global Health Ltd) and HCG (Healthcare Global Enterprises Ltd), while assigning a HOLD rating to MAXHEALT (Max Healthcare Institute Ltd). We reiterate our BUY rating on ARTMSL (Artemis Medicare Services Ltd)," Antique added.

Check target prices and outlook by the brokerage:

Healthcare Global: "We believe KKR will accelerate HCG's growth through brownfield expansion, a better payor mix, focused marketing, and continued margin expansion. Accordingly, we expect HCG to deliver an EBITDA CAGR of 25 per cent over FY26-28E. We initiate coverage with a BUY rating and a target price of Rs 840, based on 20x FY28E EV/EBITDA (versus the three-year average of 15x). The stock currently trades at 14x FY28E EV/EBITDA, a steep discount to the sector average of 19x."

Apollo Hospitals: "We expect revenue/EBITDA/PAT CAGR of 16 per cent/20 per cent/24 per cent over FY26-28E. We value APHS on a SoTP basis, valuing (a) the hospital segment at 26x FY28E EV/EBITDA, (b) AHLL at 22x FY28E EV/EBITDA, (c) Apollo Healthco's offline pharmacy business at 22x FY28E EV/EBITDA, (d) Apollo Healthco's online pharmacy business at 2x FY28E EV/Sales, and (e) Keimed at 15x FY28E EV/EBITDA, arriving at a target price of Rs 9,790. The stock currently trades at 23x FY28E EV/EBITDA (versus the five-year average of 22x). Initiate with BUY."

Global Health (Medanta): "We value MEDANTA at 27x FY28E EV/EBITDA (versus the three-year average of 24x), arriving at a target price of Rs 1,520. The stock currently trades at 24x FY28E EV/EBITDA. Initiate coverage with BUY."

Max Healthcare: "We expect revenue/EBITDA/PAT CAGR of 19 per cent/21 per cent/19 per cent over FY26-28E, with margins expanding by 100 basis points to 27 per cent. EBITDA per bed is expected to grow at a CAGR of 10 per cent, reaching Rs 88 lakh. We value MAXHEALT on a SoTP basis, valuing (a) the hospital business at 30x FY28E EV/EBITDA, (b) Max Lab at 22x FY28E EV/EBITDA, and (c) Max@Home at 4x FY28E EV/Sales, arriving at a target price of Rs 1,170. The stock currently trades at 27x FY28E EV/EBITDA (versus the three-year average of 26x). Initiate with HOLD."

Artemis Medicare: "We remain positive on ARTMSL as improving economies of scale are expected to drive higher profitability. Over FY26-28E, we expect revenue/EBITDA/PAT to post CAGRs of 27 per cent/34 per cent/36 per cent, with margins expanding by 190 basis points to 19.3 per cent. EBITDA per bed is likely to grow at a CAGR of 2 per cent, reaching Rs 57 lakh during the same period. We continue to value ARTMSL at 15x FY28E EBITDA, arriving at a target price of Rs 340. The stock currently trades at 12x FY28E EV/EBITDA. Maintain BUY."