HOSPITAL SHARE PRICES SEES A BOOST FROM HSBC'S BUY CALL
Mumbai, Dec 1 - Shares of four prominent hospital chains, including Apollo Hospitals, KIMS, Rainbow Medicare, and Aster DM Healthcare, witnessed significant gains on November 29 as a report by brokerage firm HSBC issued a buy call, predicting a substantial expansion year for the infrastructure.
HSBC's report stated that despite increased competition and a high level of debt in the sector, it expects hospital stocks to grow significantly in the upcoming year. The brokerage has set its price targets at ₹8,220 for Apollo Hospitals, ₹670 for KIMS, ₹1,800 for Rainbow Medicare, and ₹550 for Aster DM Healthcare.
The company anticipates 12-24% revenue growth but warns that this could be tempered by an EBITDA margin drag of 0-2%. However, HSBC also expects the sector to benefit from structural drivers such as India's aging population, a rise in lifestyle-related disorders, and growing health insurance coverage.
HSBC prefers hospital chains that are expanding capacity without negatively impacting margins and improving occupancy rates. The brokerage is also optimistic about hospital expansion plans in 2025, with seven of its covered hospitals planning to add around 16,000 new beds over the next three to five years.
Notably, HSBC has downgraded its estimates for capex cycles, but remains confident that hospital capacity expansions will continue through asset-light models and M&A deals. The company further expects a minor drag on EBITDA margins, citing factors such as high addition of new beds in select markets and brownfield, operations-and-management assets.
Shares of hospital chains rose higher as the news broke
The shares of Apollo Hospitals surged ₹222 up to ₹8,442 after HSBC issued an upbeat report that has been a game-changer for this healthcare major. Shareholders of these stocks also welcomed this assessment from global banking giant HSBC which predicted revenue growth and earnings before interest taxes depreciation and amortisation margin increase with considerable upside potential on the stock prices and their expected value is at ₹ 8,220.
Similarly all the other shares experienced price changes as well, share of KIMS went up by ₹150 to reach ₹660, its share rose to ₹1,800 after HSBC placed its target price. The current market dynamics have been influenced entirely by this report from international giant as it was clear that they anticipated a strong growth trend along with the high valuation expectations.
We expect Aster DM Healthcare's stock will also keep soaring at the new heights at Rs 554, following HSBC's buy call on hospital expansions in India. "HSBC’s buy call on these stocks highlights expectation of improved margins and higher growth rates for hospitals' sector," said Aashish Kumar Basu – Chief Economist & Head of Financial Markets Research, SBI Research. "The firm expects capex cycles to expand significantly in the coming year which is in sync with historical trends," he added.
While some analysts predict some correction could be seen due the anticipation of cap and drag on hospital growth which was a negative factor previously. The trend has certainly shown an upward trajectory for these stocks following this major call by global brokerage firm. The latest forecast from global finance experts will surely influence the sentiments across market participants and in turn will create trading opportunities, particularly for long-term bull investors.