The rally may, however, be short-lived as many of these stocks have already run up in recent months.
Fortis Healthcare soared over 7.2%, and Max Healthcare Institute jumped 6.3%. Yatharth Hospital and Trauma Care Services, Krishna Institute of Medical Sciences and Aster DM Healthcare gained around 4.5% each. Apollo Hospitals rose 2.5%.
“The revision is expected to bring 5-30% rate increases for key procedures in fields like cardiology, oncology and orthopedics, boosting hospital profitability and cash flows from CGHS patients,” said Pranay Aggarwal, director and CEO of Stoxkart.
With approximately 4.6 million beneficiaries across 75 cities, the updated rates are likely to drive greater hospital empanelment and participation, potentially increasing patient volumes and further supporting revenue growth, said Aggarwal.
Analysts said hospitals with higher exposure to government schemes are expected to benefit the most, potentially boosting revenues.Yatharth Hospital and Trauma Care Services has the highest revenue contribution from CGHS, while the scheme drives 20% of Max Healthcare’s revenues, according to Nuvama Alternates. About 12% of the revenues of Fortis and KIMS, and 6% of Apollo Hospitals’ revenues come from this subsidised scheme.”Earlier due to low payments, most hospitals were not keen on offering services under this scheme but post the revised rates, the traction and adoption of CGHS by hospitals is anticipated to increase,” said Nikhil Ranka, CIO, Nuvama Alternates.
“The move is expected to result in Ebitda (earnings before interest tax depreciation amortisation) upgrades of about 3-7%.” In the last six months, most hospital stocks such as Max Healthcare, Apollo Hospitals, Global Health, Aster DM Healthcare and Yatharth Hospital and Trauma Care Services have surged between 5% and 77%.
Benchmark Nifty gained 13.2% in the same period. Hospital stocks are valued fairly and are trading around 20–25 times EV (Enterprise Value) to Ebitda, said Ranka. Yatharth is at the lower end of the valuation at 13 times EV to Ebitda, but that is due to a higher government share in their revenue portfolio, he said.
“The surge in the stocks today captures most of the upside based on the positive trigger and these stocks are expected to perform in line with the market in the near term,” said Ranka
as a Reliable and Trusted News Source