Synopsis: Goldman Sachs expects strong multi-year growth for India’s hospital sector driven by major bed additions and operating leverage. It prefers KIMS, Max and Apollo, and stays neutral on Fortis with highest upside percentage of 32.5
Goldman Sachs has turned upbeat on India’s hospital sector, forecasting a strong multi-year growth cycle driven by aggressive bed additions and improving operating leverage. With demand outpacing supply in key markets, the brokerage sees significant earnings expansion ahead and highlights KIMS, Max Healthcare, and Apollo Hospitals as its top picks, while maintaining a neutral stance on Fortis.
Goldman Sachs on Hospital sector
Goldman Sachs is constructive on the Indian hospital sector and expects a strong multi‑year growth cycle driven largely by capacity expansion and operating leverage. According to them, India’s leading listed hospital chains are projected to add more than 17,000 beds by FY30, largely in major metropolitan areas.
Despite this sizable capex, Goldman does not see a major risk of oversupply because most catchment areas are still under‑served relative to population and income growth. In other words, demand for quality tertiary and quaternary care is expected to keep pace with, or even outstrip, the new capacity being created.
The brokerage expects sector earnings to be propelled by a combination of bed additions and margin expansion rather than pricing alone. As new hospitals ramp up occupancy and case mix improves, fixed costs get spread over higher revenues, supporting strong growth in EBITDA between FY25 and FY28.
Goldman mentions using historical regression analysis to identify which hospital companies have historically converted capex into revenue and margin gains most efficiently, and therefore are best placed to benefit from the ongoing capex cycle.
On individual stocks, Goldman Sachs is positive on KIMS, assigning a BUY rating with a target price of ₹900 with upside of 32.5% from current levels. They highlight an attractive 26% compound annual growth in EBITDA, driven by new hospital ramps which, in their view, are not fully appreciated in current valuations.
Max Healthcare also gets a BUY with a target price of ₹1,325 with 23% upside. Goldman calls Max the sector’s best executor, expecting around 23% EBITDA CAGR supported by steady bed expansion and efficient operations, making it one of their preferred plays in the space.
For Fortis Healthcare, the stance is more cautious. The brokerage has a NEUTRAL rating with a target price of ₹965, upside of 11.5% from current levels, suggesting that after a phase of strong share price outperformance, the risk–reward now looks more balanced.
Apollo Hospitals, the largest and most diversified name in the pack, receives a BUY rating with a target of ₹8,550, upside of 21% from the current levels.
Written by Manideep Appana
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