Fortis Healthcare, Apollo Hospitals, Manipal Health, Max Healthcare shares rise up to 5%; here's why

Shares of hospital sector such as Fortis Healthcare, Apollo Hospitals, Manipal Health, Max Healthcare and Global Health rose up to 5% on Friday after government capped trade margins on non-scheduled anti-cancer drugs at 30%, covering branded and generic medicines, domestically manufactured and imported drugs, as well as patented and non-patented products.

The measure is expected to bring down medicine prices by up to 70% and generate annual savings of around Rs 2,500 crore for cancer patients by reducing their out-of-pocket expenditure, the Union Ministry of Chemicals and Fertilisers said.

Shares of Global Health, which operates Medanta chain of hospitals, rose 3.2% to Rs 1317.25. Market cap of the firm stood at Rs Rs 35,357 crore.

Fortis Healthcare stock rose 5.37% to Rs 805.15. Market cap of the hospital stock stood at Rs 58,966 crore.

Apollo Hospitals shares gained 4% to Rs 7977 in the current session. Market cap of the firm rose to Rs 1.14 lakh crore.

Shares of Manipal Health also rose 4.68% to Rs 715.50. Max Healthcare shares rose over 3% to Rs 915 on BSE. The decision extends price protection to non-scheduled anti-cancer medicines, which are not covered under the existing list of scheduled drugs subject to ceiling prices. By restricting the trade margins charged across the supply and distribution chain, the government aims to curb mark-ups before these medicines reach patients, making cancer treatment more affordable.

“Although near-term margin could be impacted, we believe this will be transitory but importantly, regulatory uncertainty eases for now,” Jefferies analysts Alok Dalal and Dhawal Khut wrote in a note.

The brokerage believes the recent correction in hospital stocks has created an attractive entry opportunity for investors. Hospital companies are currently trading at around 21–25 times their estimated FY28 EV/EBITDA, compared with valuations of 25–35 times a year ago, making the sector relatively more attractive from a valuation perspective.