Max Healthcare bed ramp-up supports growth despite oncology pressure

Investment View and Valuation

In its August 17, 2026 result update, Anand Rathi Research maintained its BUY recommendation on Max Healthcare and retained its target price of Rs1,220. The broker described Q1 FY27 performance as stable despite pressure on oncology and expects growth to be supported by the ramp-up of Max Smart and Max Vaishali, brownfield additions and more than 2,000 planned beds over the long term.

The target price is based on 32 times FY28E EV/EBITDA for hospitals and 26 times FY28E EV/EBITDA for diagnostics.

Q1 FY27 Financial Performance

Max Healthcare reported consolidated revenue of Rs28,350m in Q1 FY27, up 15.2 per cent year-on-year and 11.6 per cent quarter-on-quarter. Revenue excluding oncology increased 20 per cent year-on-year. EBITDA rose 14.8 per cent year-on-year to Rs7,050m, while adjusted net profit increased 3.3 per cent to Rs3,790m.

The reported EBITDA margin was 24.9 per cent, broadly flat year-on-year but below 26.8 per cent in Q4 FY26. The sequential margin decline reflected recently commissioned brownfield capacity and the acquisition of Kalinga Hospital. Revenue growth was mainly driven by a 10 per cent year-on-year increase in occupied bed days. Occupancy remained at 75 per cent, while average revenue per occupied bed rose 5 per cent year-on-year to Rs81,900.

Max Labs revenue was Rs580m, up 20 per cent year-on-year, and Max@Home revenue was Rs780m, up 32 per cent. RoCE excluding capital work in progress stood at 29.2 per cent in Q1 FY27.

Oncology Business Pressure

Oncology was a key area of weakness during the quarter. Its share of inpatient department revenue fell to 22 per cent from 26 per cent in Q1 FY26, owing to the discontinuation of select chemotherapy drugs for institutional patients.

The report also identifies price caps and team exits as pressures on the oncology business. Nevertheless, Anand Rathi considers the overall Q1 FY27 result strong and believes capacity additions can sustain growth.

Hospital Expansion and Capacity Additions

Max Healthcare’s expansion initiatives include the acquisition of a 58.28 per cent stake in the 250-bed Kalinga Hospital on May 18, 2026, for about Rs2,980m.

On June 30, 2026, the company acquired 100 per cent voting rights in Yerawada Properties Pvt. Ltd., representing about 50.22 per cent economic interest. The entity has preliminary municipal approval for a proposed 450-bed hospital in Pune.

• At Max Smart, 202 beds are operational and the remaining 198 beds are expected to be commissioned in Q2 FY27.
• The board approved Rs4,250m for a 202-bed brownfield tower at MSSH, Vaishali, in addition to its existing 387 beds.
• Commissioning of the Vaishali tower is expected in Q4 FY30.
• Over the long term, more than 2,000 beds are planned to support the company’s growth.

Medical Education Plans

Management plans to enter medical education after changes by the National Medical Commission permitted for-profit hospitals to open medical colleges. Management expects the venture to generate return on capital employed above 25 per cent.

The initial plan is for a 150-seat medical college at the 27-acre Lucknow campus, requiring about Rs3,000m of capex.

Earnings Outlook

Anand Rathi marginally raised its FY27E and FY28E estimates. Revenue estimates were increased by 0.2 per cent and 0.3 per cent, respectively, while EBITDA estimates were raised by 0.2 per cent and 0.7 per cent. PAT estimates were increased by 0.8 per cent and 2.0 per cent, respectively.

The broker forecasts revenue and EBITDA CAGR of 18 per cent each over FY26-FY28E.

Key Risks

• Delayed project execution and slower bed additions.
• Regulatory interventions, including price controls, margin caps or mandatory bed allocation.
• Weaker international business.