Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6%

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  • Sep 30, 2021 - Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6%

Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6%

Sep 30, 2021

Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6%

Max healthcare shares fell 6% to Rs 345.4 per share on the BSE yesterday on the back of heavy volume and bulk deals.

That's the biggest single-day loss since 17 September, when the stock dropped 10.6%. The scrip was the second-worst performer on BSE 500 and Nifty 500.

According to a media report, Kayak Investments Holding, one of the promoter entities of Max Healthcare, on Wednesday sold 84.4 m shares of the company for Rs 29.6 bn through open market transactions.

The shares were picked up by Veritas Funds Plc, SBI Mutual Fund and HDFC Mutual Fund among others.

As many as 60.2 m shares were sold at an average price of Rs 350, while 24.2 m scrips were divested at Rs 350.13. At these prices, the transactions were valued at Rs 29.6 bn.

The sale of a 6.6% stake by Kayak Investments is considered to be one of the largest block deals of the market to take place on 29 September 2021.

As of 30 June 2021, Kayak Investments held a 47.24% stake in Max Healthcare Institute.

In August 2021, Kayak Investments Holding completed an open market sale of 2.7 m equity shares, constituting 0.28% equity of Max Healthcare to comply with the minimum public shareholding threshold set by the market regulator.

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Who leads the company and who are the other shareholders?

Abhay Soi is the promoter, chairman and managing director of Max Healthcare Institute.

Prior to the acquisition and merger with MHIL, Soi was the promoter, chairman, and managing director of Radiant Life Care Private Limited.

Both Radiant and Max Healthcare merged on 1 June 2020, resulting in the 2nd largest hospital company in India in terms of revenue.

Currently, Abhay Soi holds 23.18% stake in the company. In last 3 months, his holding in the company has increased by 1.4%.

Also, in the last few months, mutual fund holding of the company has increased significantly. They hold 7.9% stake in the firm.

That apart, Ashish Dhawan, one of the most popular private equity investors, holds 1.42% stake in the company. However, in the past few months, he has decreased his stake by 0.36%.

To know more, check out Max Healthcare's latest shareholding pattern.

Company achieved highest-ever operating profit in June quarter

The company reported strong results for the quarter ended June 2021, with the highest-ever operating profit and margin.

Max Healthcare reported the highest ever network operating EBITDA (earnings before interest, taxes, depreciation, and amortisation) at Rs 3.6 bn, a 37% increase quarter-on-quarter (QoQ). This is the third consecutive quarter of the highest EBITDA both in absolute and margin terms.

The company's network gross revenues rose to Rs 13.9 bn during the first quarter reflecting a growth of 124% year on year (YoY).

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Max Healthcare aims to be debt-free by third quarter of 2022

As on March 2021, the company has total debt of Rs 4.8 bn compared to Rs 6.6 bn reported in the same period of the last year.

On the debt reduction plan Abhay Soi said,

  • Going forward, if one were to assume and just for calculation purposes, because I don't give topline guidance, but if one were to assume a 10% growth on topline, then our free cash flows would be increasing materially by about 18-20% per year.

    In the next four to five years, we should be generating through internal accruals alone, close to about Rs 50 bn to Rs 60 bn and this is on our debt-free balance sheet, I mean, effectively as we speak, my current debt levels are perhaps lower than my last quarter's EBITDA.

He further added that there will be significant debt reduction within this current quarter and hopefully by next quarter, the company will be a debt-free.

Improvement in non-Covid business

With the reduction in Covid cases, MHI is seeing a strong rebound in its non-Covid business, resulting in an increase in its total average revenue per occupied bed (ARPOB).

Max Healthcare is also aiming for a 79-80% occupancy rate, which will help to improve its financials further.

Due to the countrywide lockdown and farmers' protest last year, the firm was unable to operate at full capacity. As a result, the company's was badly hit.

The company's outpatient department (OPD) business has yet to fully recover, and its foreign business (which contributes 10-12% of revenue) has only recovered to 60% of pre-Covid levels.

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How the stock markets reacted to Max Healthcare

Shares of Max Healthcare opened the day at Rs 354.7 on the BSE and Rs 354 on the NSE.

Its share price closed at Rs 355 (down 3.6%) on the BSE and Rs 355.1 (down 4%) on the NSE.

At its current price, it is trading at a P/E of 107.

The share touched its 52-week high of Rs 472.6 and 52-week low of Rs 102.5 on 16 September 2021 and 29 October 2020, respectively.

Over the last 30 days, the Max Healthcare share price is up 6.3%. Over the last one year, the company's share price is up 207%.

Max Healthcare - 1 Year Performance

About Max Healthcare Institute

Max Healthcare Institute is one of India's largest healthcare firms.

It operates 16 healthcare facilities (3,400 beds) across the NCR Delhi, Haryana, Punjab, Uttarakhand, and Maharashtra. Almost 85% of total bed capacity is in Metro or Tier 1 cities.

Apart from hospitals, Max Healthcare also operates a homecare business and pathology business under brand names Max@Home and Max Labs respectively.

Max@Home offers health and wellness services at home while Max Lab provides pathology services outside hospital network.

For more details about the company, you can have a look at Max Healthcare's factsheet and quarterly results on our website.

You can also compare Max Healthcare with its peers.

Max Healthcare vs Apollo Hospitals

Max Healthcare vs Fortis Healthcare

Max Healthcare vs Metropolis Healthcare

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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MAX HEALTHCARE INSTITUTE 2020-21 Annual Report Analysis (Annual Result Update)

Oct 22, 2021 | Updated on Oct 22, 2021

Here's an analysis of the annual report of MAX HEALTHCARE INSTITUTE for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of MAX HEALTHCARE INSTITUTE. Also includes updates on the valuation of MAX HEALTHCARE INSTITUTE.

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