Why Max Healthcare Get a Valuation Premium V/S Apollo Hospitals

Copyright © HT Digital Streams Limit all rights reserved. The valuation of Max Healthcare: Here is why it is better than Apollo Hospital Manish Joshi 3 min read 26 Aug 2025, 01:36 pm IST Max will probably have more weight in the index than Apollo Hospital Enterprise Ltd, which goes according to the current free-float market cap. (Inventory image: Pixabay) Summary Max’s bed capacity was lower than that of Apollo, but the occupancy rate in the June term was higher. Max Healthcare Institute Ltd has been buzzing lately. The National Stock Exchange said on Friday that Max will be included in the Nifty 50 index from September 30 as part of the semi -annual review of index ingredients. If included, Max is likely to have more weight in the index than Apollo Hospitals Enterprise Ltd, with the current free-float market cap of £ 90,000 crore versus £ 79,000 for the latter. There is also Max’s suspension of cashless treatment in his hospitals for the Bajaj Allianz policy containers. This has to do with the obstacle between hospitals and general insurance companies about alleged overflows of clients. The suspension of the cashless facility may have dampened the positive sentiment around Max’s Nifty Inclusion announcement, which may explain the initial subdued response of the stock. Passively managed funds that repeat repeated voters will have to buy $ 400m value at the time of rebalancing, according to Nuvama’s estimates, although it is still a while away. Regardless of the nice inclusion, actively managed funds will continue to evaluate Max’s relative attraction to Apollo hospitals. Max’s shares rose 43% over the past year and beat Apollo’s 14% gains, suggesting that the share has been on the radar of smart investors for some time. PL Capital and Motilal Oswal Financial Services valued Max’s hospital business at 36x and 35x, based on EV/EBITDA for FY27. Both have assigned a lower multiple of 30x EV/EBITDA for Apollo’s hospital business. The comparison is for the hospital industry only and excludes the diagnostic segment, which is smaller. In addition, Apollo has a pharmacy and digital businesses of 24/7. Bed capacity So why does Max’s hospital business get an almost 20% valuation premium above Apollo’s? For starters, Max’s bed capacity was 5.200 at June end compared to the much higher 9,463 beds of Apollo. But Max’s occupancy rate in the June term (Q1 of FY26) was higher at 76% compared to 65% of Apollo. The ebitda margin for both is similar to 25%. But Max’s report Arpob (average income per occupied bed) was £ 78,000 versus £ 63,000 for Apollo, according to Motilal Owal. There may be a difference in calculation regarding the net fees paid to service doctors. Max’s return on capital (ROCE), excluding capital work going on and new units in the first quarter, was 32% versus 28% for Apollo (excluding capital work going on). The gap seemed more striking considering that Apollo had been around Max’s 24 years for 42 years, which had to give the former capital benefit in terms of lower real estate costs. Apollo plans to add 50% capacity over the next five years, while Max aims to double capacity, although on a smaller basis. Max is therefore likely to produce a higher growth rate than Apollo, even beyond FY27. It also indicates the FY27 valuations mentioned earlier, the higher growth of Max until then sufficient. Max plans to use the ‘agreement to rent a route for almost 30% of its capacity expansion, which is about 1500 beds. This may increase the Roce benefit above Apollo. This route involves obtaining a customized hospital made by a third party and takes it on a long -term lease. The two brokerage firms seem justified in awarding higher valuation -plights to Max, given the excellent ROCE and a higher future growth potential. But since the target prices of both firms display about 10% upside down for Max, the return of the shares can be applied in the short term. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Markets Read Next Story