Hospital stocks have significantly lifted the performance of the BSE Healthcare Index in the past three years. While the index has returned 53% over this period, the 10 listed stocks, which have been around for the same period, have given an average return of 222%. In total, there are 14 listed hospital stocks in the BSE Healthcare Index that has a total of 99 stocks.
The stocks that gave maximum returns during this period were Artemis Medicare (476%), followed by Apollo (270%), and Narayana Hrudayalaya (259%). Among the hospitals stocks listed on the BSE, Apollo Hospitals, Narayana Health, Max Healthcare & Global Health hit 52-week-highs on Thursday.
As per JP Morgan’s report, after consolidating bed capacities over FY19-23, most players are looking to expand capacities aggressively, albeit strategically, to fuel the next leg of growth. The firm has initiated its coverage with an overweight rating on Apollo Hospitals (target- Rs 5950) and Fortis healthcare (target price — Rs 355) and a neutral stance on Max Healthcare and Medanta.
According to Crisil estimates, the hospital industry accounts for 61% of India’s healthcare market and will record a 15-17% CAGR to `7.7 trillion by FY25. The share of the private hospitals within this is expected to rise from 58% in FY21 to 73% by FY25.
Hemang Jani, an independent market analyst, said: “There has been big under-representation of the healthcare sector in the indices and very few quality names are available for participation. Max Health has given strong performance in the recent quarter and good growth outlook for this year.”
He added that Apollo Hospitals is also positive of growth from its hospitals, pharmacy and diagnostic businesses. “Sector appears overpriced, but could remain at an elevated level due to stable earnings and limited company in the space,” he said.