Max Healthcare bed expansion and payor mix support hospital growth

Investment View and Recommendation

ICICI Securities’ November 4, 2026 results update on Max Healthcare Institute maintains a BUY recommendation and an unchanged target price of Rs 1,300. The broker views Max Healthcare as well placed to benefit from brownfield capacity additions, a better payor mix and sustained international patient flows.

It expects the ramp-up of newly commissioned beds to support growth over the next few quarters, while management’s planned addition of further brownfield and greenfield beds should sustain momentum.

Q2FY27 Financial Performance

Max Healthcare reported Q2FY27 gross revenue growth of 19.6 per cent YoY and 7.9 per cent QoQ to Rs 3,209 crore. Net revenue increased 18.4 per cent YoY and 7.7 per cent QoQ to Rs 3,046 crore, in line with ICICI Securities’ expectations. Growth was driven by a roughly 13 per cent YoY rise in occupied bed days and an 8 per cent increase in average revenue per patient.

EBITDA margin was affected by commissioning costs for new brownfield capacity and Rs 17 crore of Kalinga facility upgrade costs. Higher depreciation and interest costs constrained reported earnings growth despite the increase in adjusted PAT.

Operating Performance and Regional Growth

Operating metrics remained resilient despite rapid expansion. Operational beds rose 15.9 per cent YoY to 5,518, while occupancy was stable YoY at 77 per cent and increased 200 basis points QoQ. Inpatient volumes rose 12.4 per cent YoY to 98,464 and outpatient volumes grew 13.3 per cent YoY to 11.44 lakh. Average revenue per inpatient increased 7.9 per cent YoY to about Rs 2.3 lakh.

Maharashtra’s growth was aided by the new brownfield tower at Nanavati-Max.

Payor Mix and International Patients

Management is improving the payor mix by reducing scheme-based and institutional exposure at mature hospitals. Select chemotherapy drugs for institutional patients were discontinued, reducing oncology’s share of inpatient revenue to 21 per cent in Q2FY27 from 26 per cent a year earlier. Ex-oncology network gross revenue grew about 25 per cent YoY.

International-patient revenue was a positive surprise, rising 33 per cent YoY and accounting for 10 per cent of revenue. ICICI Securities believes the improved payor mix and international flow can offset near-term pressure from the trade-margin curb on oncology drugs and the EBITDA drag from new greenfield projects.

Capacity Expansion and Growth Outlook

Management added 202 brownfield beds in Q2FY27, mainly at Max Smart, Max Lucknow and Max Noida, and approved Rs 415 crore of capex for 209 further brownfield beds. ICICI Securities notes that Max Healthcare could add around 1,400 beds across the network over the next three to four quarters.

The Gurgaon greenfield hospital is expected to commission 150 to 200 beds by end-FY27, although management expects an EBITDA drag of Rs 40 crore to Rs 50 crore.

The broker expects revenue from the existing network to grow at a roughly 12.5 per cent CAGR over FY26 to FY29E, while newly added beds could contribute around 40 per cent of revenue by FY29E.

Estimates, Valuation and Risks

ICICI Securities raised FY27E and FY28E EBITDA estimates by about 1 per cent and 4 per cent, respectively, to reflect better margins from ramping brownfield beds.

The Rs 1,300 target price is based on a sum-of-the-parts valuation using FY28E. The valuation applies a 35 times EBITDA multiple for existing hospitals and 22 times for new hospitals, implying a 31 times FY28E EV/EBITDA multiple for the network.

Key downside risks:

• Trade-margin curbs on pharmaceuticals and medical supplies.
• Capacity-expansion execution risk.
• CGHS or institutional pricing pressure.