AxisCap - Max Healthcare - CR - 14 Dec 2021

Max Healthcare Institute
Expansion visibility key differentiator; initiate with BUY
December 14, 2021 Pharmaceuticals | Initiating coverage
BUY  MHIL is the 2nd largest hospital chain (by sales) in India despite being 3rd
largest (operating bed) given focus on high value markets – Delhi NCR, Mumbai.
CMP: Rs 399  Strong positioning and execution have led to best in class ARPOB, EBITDA per
Target Price: Rs 465 bed; capacity expansion in existing hospitals with land bank is key differentiator.
Potential Upside: 17%  Improvement in payor mix, capacity expansion led by strong FCF/ BS, scale-up
in Max Labs are key future drivers. Initiate with BUY and TP of Rs 465.
Market Data
No. of shares : 970 mn
Strong positioning – best in class ARPOB, margin, operating efficiency
Free Float : 39%
Market Cap : USD 4,882 mn  Max Healthcare (MHIL) is the 2nd largest (sales) and 3rd largest (operating bed
52-week High / Low : Rs 473 / Rs 128 capacity) hospital chain in India. It has a network of 17 hospitals/clinics with
Avg. Daily vol. (6mnth) : 2.5 mn shares over 3,200 beds and focus on north India (Delhi NCR) and Mumbai.
Bloomberg Code : MAXHEALT IB Equity  Being a market leader with highest sales (North India), ARPOB, and occupancy,
Promoters Holding : 61% it has been able to garner best doctors and medical staff given its focus on
FII / DII : 14% / 9% metros (Mumbai/ Delhi NCR) – most attractive and under-penetrated market.
 Post new management (Mr. Abhay Soi and KKR) in Aug’20, EBITDA margin of
Key drivers (%) FY22E FY23E FY24E Max hospitals has improved to 26.3% in Q2’22 (adj. for one-offs) from 11.6% in
Hospital margins 25.4% 26.8% 27.3% Q1’20. EBITDA margin expansion to 26.5% in H1FY22 (from 8.9% in FY19) led
Labs margins 12.5% 16.0% 18.0% by Rs 3 bn+ cost savings initiatives, improvement in ARPOB (case mix), etc.
Blended margins 25.4% 26.5% 27.0%
Multiple drivers for growth – payor mix, scale-up in labs, capacity addition
 It sees steady growth/ margin led by (1) improvement in payor mix as 21%
business is from low margin institutional business which it expects to reduce,
Relative performance (2) increase in high margin international business (4% in H1’22 vs 11% in FY20).
Sensex Max Healthcare  Max Labs/ homecare seeing strong traction (added 135+ collection centers in
400
H1’22 with total count of partner network (collection and PUPs) at 430. Scaling
300
up of labs business and potential spin-offs could be value unlocking opportunity.
200
 Max plans to double its bed capacity with addition of 3,300+ beds through
100 brownfield in existing hospitals which already have 70-80% occupancy
0 (construction/ occupancy scale up is much faster) and greenfield expansion
Aug-20 Jan-21 Jun-21 Nov-21 (Gurugram – highest EBITDA per bed, NCR dominance). Max is evaluating M&A
Source: Bloomberg, Axis Capital
and asset light models (via developers/ REIT players) to expand in key cities.
Initiate coverage with BUY and TP of Rs 465 (26x Sep’23E blended EV/E)
Significant improvement in margin from 9.7% in FY19 to 26.3% in H1FY22 has led
to 1.8x rise in stock price in last 1 year. MHIL is ready for next leg of growth via
improvement in payor/case mix and doubling of capacity (organically and
inorganically) supported by strong FCF/ BS.
Financial summary (Consolidated)

Y/E March FY20 FY21 FY22E FY23E FY24E
Sales (Rs mn) 39,907 36,020 52,044 56,343 66,140
EBITDA (Rs mn) 5,166 2,875 13,204 14,922 17,835
Adj. PAT (Rs mn) 1,692 1,369 8,714 9,687 11,692
Con. EPS* (Rs) - - 8.2 9.5 11.7
Prakash Agarwal (Dy Head – Research | ED – Pharma) EPS (Rs) 1.9 1.4 9.0 10.0 12.1
prakash.agarwal@axiscap.in ; +91 22 4325 1145 Change YoY (%) (1,639) (24) 537 11 21
Mehul Sheth (AVP – Pharmaceuticals) RoE (%) 6.5 3.0 14.2 13.9 14.6
mehul.sheth@axiscap.in ; +91 22 4325 1131 RoCE (%) 7.0 1.5 14.8 15.2 16.4
Madhur Sharma (Manager – Pharma) P/E (x) 203.9 269.3 42.3 38.0 31.5
madhur.sharma@axiscap.in EV/E (x) 71.5 130.6 28.3 24.8 20.5
Source: *Consensus broker estimates, Company, Axis Capital
Note: ARPOB – Average Revenue Per Occupied Bed Day, Occupancy – number of operating beds
Download Axis Capital is also available on Bloomberg (AXCP<GO>), Reuters.com, Firstcall.com and Factset.com. 1
FOR IMPORTANT DISCLOSURES AND DISCLAIMERS, REFER TO THE END OF THIS MATERIAL
Initiating coverage
Table of contents
Key charts.......................................................................................................................................................... 3
Growth drivers ................................................................................................................................................ 5
Max Healthcare – strong positioning .................................................................................................... 7
Company structure and overview......................................................................................................... 11
Max Healthcare – Multiple drivers for growth................................................................................ 15

Near term drivers ........................................................................................................................................15
Mid-to-long term growth drivers...........................................................................................................19
Valuations ....................................................................................................................................................... 29
Peer comparison ........................................................................................................................................... 30
About the company ..................................................................................................................................... 32
Max and Radiant merger – scheme, QIP, impact on financials ................................................. 35
Financials as reported in annual report by Max Healthcare (Consolidated) ...................... 38
December 14, 2021 2

Initiating coverage
Key charts
Exhibit 1: Max is 2nd largest hospital by revenue… Exhibit 2: …and 3rd by operating bed capacity
FY20 FY21 FY21

10,000 (Operational
80 beds Nos)
Sales (Rs bn)
8,000 7,409
57
60 5,787
50
6,000
40 38
40 36
31 31 4,000 3,250 3,133
26 2,686
20 16 17 2,000
0
0 Apollo Narayana Max Fortis Aster DM
Apollo Max Fortis Narayana Aster DM Hosp Health#
Hosp Health#
Source: Companies, Axis Capital; FY20 represents Max Healthcare + partnered Source: Companies, Axis Capital; Max Healthcare FY21 beds include Radiant Life and
healthcare facilities and demerged business of Radiant Life. FY21 includes sales of Max Healthcare as part of demerger scheme
Radiant Life and 10 months of Max Healthcare as part of demerger scheme
Exhibit 3: Higher ARPOB vs. peers Exhibit 4: Better occupancy given strong metro presence
Apollo Aster Max Fortis Narayana FY20 FY21 H1FY22
60 100% (%
ARPOB (000'
78%
occupancy)
55 Rs/ day)
73%
70%
80%
69%
66%
67%
65%
64%
50 61%
56%
55%
56%
45
60%
40
35
40%
30
25 20%
20
15 0%
FY17 FY18 FY19 FY20 FY21 H1FY22 Apollo Hosp Aster DM Max Health# Fortis
Source: Companies, Axis Capital; FY20 represents Max Healthcare + partnered Source: Companies, Axis Capital; FY20 represents Max Healthcare + partnered
healthcare facilities and demerged business of Radiant Life. FY21 includes sales of healthcare facilities and demerged business of Radiant Life. FY21 includes sales of
Radiant Life and 10 months of Max Healthcare as part of demerger scheme Radiant Life and 10 months of Max Healthcare as part of demerger scheme
Exhibit 5: Max Healthcare has metro focused hospitals Exhibit 6: Metro focused hospitals have higher margin
(% of total
beds % hospital beds in metro cities (FY20) FY20 FY21 H1FY22
capacity)
31%
35%
100%
26%
84%
25%
30%
24%
22%
80% 72%
20%
61% 25%
18%
16%
54%
16%
60% 20%
14%
10%
40% 15%
6%
18% 10%
20%
5%
0% 0%
Max Fortis Apollo Manipal Aster DM Apollo Max Health Narayana Narayana
Health# Hosp Chennai^ Bangalore Kolkata
Source: Company, Axis Capital; as of FY21 Source: Company, Axis Capital; as a % of H1FY22 gross sales
December 14, 2021 3

Initiating coverage
Exhibit 7: Max Healthcare: Cost efficient model Exhibit 8: Management focus on cost controls…
Cost comparison Cost comparison
% of sales FY20 FY21 H1FY22 % of sales FY20 FY21 H1FY22
Doctor fee Employee cost
Apollo 20 20 20 Apollo 14 13 10
Aster DM 8 7 8 Aster DM 34 32 32
Max Health 24 13 14 Max Health 22 26 21
Narayana 20 20 18 Narayana 22 24 21
Fortis 21 20 18 Fortis 20 21 17
CoGS Other expenses
Apollo 41 45 44 Apollo 17 17 17
Aster DM 29 30 30 Aster DM 15 19 18
Max Health 22 27 28 Max Health 18 18 11
Narayana 24 26 25 Narayana 21 23 19
Fortis 21 24 24 Fortis 25 25 21
Source: Companies, Axis Capital; Apollo Hospitals revenues grossed up to adjust Source: Companies, Axis Capital; Apollo Hospitals revenues grossed up to adjust
doctor fees. Apollo Hospitals has higher CoGS due to Pharmacy business (as % of doctor fees
sales stood at 43%, 465 and 35% for FY20, FY21 and H1FY22 respectively)
Exhibit 9: …leading to margin improvement Exhibit 10: EBITDA per bed for Max higher vs. peers
Apollo Aster Max Health FY20 FY21 H1FY22
Fortis Narayana
5
30% (Rs mn)
(EBITDA 3.8
25% margin %) 4
20% 3
2.4
15%
2 1.4 1.7 1.7 1.4
1.7
10%
1.2
0.9 0.8 0.7
1 0.7
5%
0% 0
FY17 FY18 FY19 FY20 FY21 H1FY22 Apollo Max# Aster Fortis
Source: Companies; ^ Apollo Hospitals – EBITDA adjusted for clinician pay-outs in Source: Companies, Axis Capital; Note: EBITDA for hospital business, Max Healthcare
revenue; EBITDA margin is post IND AS FY20 onwards EBITDA adjusted for one-offs and vaccination revenues, Aster DM EBITDA is for
India business
Exhibit 11: Improving operating CF and FCF Exhibit 12: Net debt declining across companies
(Net debt
Operating CF Capex FCF Rs bn)
FY20 FY21 H1FY22
4,000 3,727 35
(Rs mn) 31
30 28
3,000 2,617
25
20
2,000 19 19
20
1,179 14
771 15 11
1,000 10
10 8 9
5 6 5
0 5 3 2
(130) (6)
0
(1,000)
Apollo Max Health Aster DM Narayana Fortis
FY20 FY21 H1FY22
Source: Companies, Axis Capital; Note: Max Healthcare FCF for FY20 excludes Source: Companies, Axis Capital
~Rs 21 bn for purchase of Max Healthcare equity share by Radiant Life and
H1FY22 excludes Rs 601 mn for acquisition of subsidiary
December 14, 2021 4

Initiating coverage
Growth drivers
Exhibit 13: Focus to increase share of self-paid (cash), international in revenue mix
Bed capacity share (%) Revenue share (%)
% share FY20 FY21 H1FY21 FY20 FY21 H1FY21
Self-Pay, TPA and Corporate 58% 64% 67% 67% 73% 75%
International 8% 2% 2% 11% 4% 4%
Institutional 34% 34% 31% 22% 23% 21%
Source: Company
Exhibit 14: Doubling bed capacity over FY22-27

Hospitals Existing # of beds Total Likely construction Likely Total Capex
beds commencement by commencement (Rs mn)
of operations
Brownfield projects
Max Shalimar Bagh, Delhi 280 100 380 Commenced in Sep'21 H2FY24 1,120
Max Mohali, Punjab 220 190 410 Q4FY22 H2FY24 1,990
Max Smart, (Saket Complex) -1 250 350 600 Q4FY22 H1FY25 6,840
Nanavati Max, Mumbai -1* 328 329 657 Q4FY22 H2FY25 4,350
Vikrant Foundation, (Saket Complex) - 300 300 Q4FY24 H1FY26 3,600
Max Smart, (Saket Complex) -2 - 250 250 Q2FY25 H1FY27 2,300
Nanavati Max, Mumbai – 2* - 271 271 Q2FY25 H2FY27 2,830
Max Smart, (Saket Complex) -3 - 300 300 on or after FY28 NA 2,250
Vikrant Foundation, (Saket Complex) -2 - 200 200 on or after FY28 NA 2,400
Others 2,314 - 2,314 NA NA -
Total Brownfield projects 3,392 2,490 5,882 30,380
Greenfield Projects
Gurugram Sector 56** - 500 500 Q4FY23 H1FY26 6,700
Gurugram Sector 53** - 500 500 on or after FY28 NA 6,700
Total Greenfield Projects** - 1,000 1,000 13,400
Overall total 3,392 3,490 6,882 43,780
Source: Company, Axis Capital; Note: * ~160 beds need to be demolished before commencement of Phase 2, ** Excludes land cost | Above excludes routine capex. Others include
hospital beds across Delhi, Punjab and Dehradun
Exhibit 15: Strong growth in Max Labs over last five years
Max Labs and Max Homecare
Gross revenues witnessed strong traction during
800
(Rs mn) 676 Covid and network expansion with
700
570 total count of active partner
600
network (collection and PUPs) at
500 430+ (added 135+ new collection
409
400 centers in H1’22). Expanding and
300 243 scaling up its labs business and
200 131 potential spin-offs could be value
51 unlocking opportunity.
100
0
FY17 FY18 FY19 FY20 FY21 H1FY22
Source: Company, Axis Capital
December 14, 2021 5

Initiating coverage
Exhibit 16: Max Healthcare capacity expansion in existing hospitals with land bank is key differentiator
Company Key expansion plan
Focus to expand in North and East region; M&A opportunities – targets hospital assets with 300-500 bed capacities;
Apollo Hospitals
Focus on expansion across its digital capability – Apollo 24/7; targets ~5,000 retail stores by FY25/26 (vs. 4,292 in H1FY22)
Looking to expand hospitals in India – Maharashtra, Chennai, Bangalore and Kerala; 411 beds planned in the next 18 months
Aster DM
Network expansion in AHLL; focus on organic expansion for its Diagnostic business
Looking to double its bed capacity over FY22-27

Max Healthcare
Plans to add beds in Saket, Delhi ~900, in Nanavati ~700 beds, in Mohali ~190 beds and in Shalimar Bagh, Delhi ~100 beds
Narayana No major expansion plans in near term
Fortis Looking to expand overall bed capacity (Occupancy at ~60% in H1FY22)

Valuation comparison
Exhibit 17: Hospital peer valuation comparison

Mcap P/E (x) EV/EBITDA (x) ROE (%) RoCE (%)
(Rs bn) FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY19 FY20 FY21
India
KIMS IB Equity 107 35.6 30.1 28.4 21.9 18.0 16.6 27.0 na na na 19.2 25.4
APHS IB Equity 748 84.3 62.1 49.4 34.0 29.0 24.2 17.9 19.6 21.4 6.1 11.1 4.9
ASTERDM IB Equity 96 22.4 16.2 15.8 10.5 8.9 8.4 11.7 14.4 na 11.5 10.4 6.3
MAXHEALT IB Equity 387 48.9 41.9 34.2 29.0 26.9 22.6 16.3 18.5 19.1 na na na
FORH IB Equity 214 61.1 41.2 37.0 21.0 18.5 16.7 6.7 7.3 7.0 na 3.4 - 5.8
NARH IB Equity 117 40.0 31.4 27.4 19.8 16.3 14.5 22.7 23.2 22.9 6.1 9.9 na
India Industry Weighted
63.3 47.9 39.5 28.0 24.4 20.8 16.6 16.5 16.5 3.8 7.9 3.4
Average
Asia Peers
IHH MK Equity 1,034 38.9 36.1 31.6 16.9 16.1 14.6 6.3 6.5 7.2 3.6 4.9 4.4
BDMS TB Equity 818 51.0 41.8 35.5 23.3 20.5 18.3 8.4 10.0 11.2 15.7 15.4 7.1
Asia Industry Weighted
44.3 38.6 33.3 19.7 18.1 16.2 7.2 8.0 9.0 8.9 9.6 5.6
Average
Source: Bloomberg; as of 13 Dec 2021
Exhibit 18: SoTP valuation

Dec'23E
SOTP valuation
EBITDA (Rs mn) Multiple (x) EV (Rs mn)
Hospitals EBITDA 16,719 26 4,34,690
Labs EBITDA 388 32 12,405
Total EBITDA 17,107 26 4,47,095
Less: Net Debt* (Rs mn) (1,626)
Equity Value (Rs mn) 4,48,722
TP (Rs/ sh) 465
Source: Axis Capital; Note: *Net debt includes lease liabilities
December 14, 2021 6

Initiating coverage
Max Healthcare – strong positioning

Strong positioning in north India – largest by sales, best in class ARPOB, occupancy
Exhibit 19: Max is 5th largest by total bed capacity… Exhibit 20: …and 3rd by operating bed capacity
(Nos of FY21 FY21
beds) (Operational
10,000
12,000 beds Nos)
10,206 7,409
10,000 8,000
5,787
8,000 6,750 6,000
6,000 4,000 3,250 3,133

4,250 2,686
3,708 3,371
4,000
2,000
2,000
0
0 Apollo Narayana Max Fortis Aster DM
Apollo Narayana Fortis Aster DM Max Hosp Health#
Hosp Health#
Source: Company, Axis Capital Source: Company, Axis Capital
Exhibit 21: Max: 2nd largest hospital by revenue in India

Sales (Rs bn) FY20 FY21 Max Healthcare and Radiant
merged their healthcare businesses
70
to create the second largest
57
60 healthcare chain in India by
50
50 revenue and the largest player in
40 38
40 36 north India (Delhi NCR) with
31 31
highest ARPOB and occupancy.
30 26
20 16 17
10
0
Apollo Hosp Max Health# Fortis Narayana Aster DM
Exhibit 22: Max’ metro focus… Exhibit 23: …leads to higher occupancy…
FY20 FY21 H1FY22
(% of total
beds % hospital beds in metro cities (FY20) 100% (%
capacity)
78%
occupancy)
73%
70%
100% 80%
69%
66%
67%
65%
64%
84%
61%
56%
72%
55%
80%
56%
61% 60%
60% 54%
40%
40%
18%
20% 20%
0%
0%
Max Fortis Apollo Manipal Aster DM
Apollo Hosp Aster DM Max Health# Fortis
Health# Hosp
December 14, 2021 7

Initiating coverage
Exhibit 24: …and higher ARPOB

Improvement across operating
Apollo Aster Max Fortis Narayana metrics – increasing occupancy,
60 reduction in ALOS, improving case
ARPOB (000'
55 Rs/ day) as well as payor mix – coupled with
50 the presence in Tier-I metro cities
45 (~80%+ bed capacity in Delhi NCR
40 and Mumbai) helped the company
35 see strong and steady ARPOB over
30 last few years (specifically post the
25 management change in FY20/21).
20
15
Source: Companies, Axis Capital
Exhibit 25: Metro focused hospitals have high margin Exhibit 26: Even higher than matured hospitals
FY20 FY21 H1FY22 FY20 FY21 H1FY22

31%
35% 30%
25%
26%
23%
25%
30%
24%
25%
22%
19%
19%
20%
18%
18%
25%
18%
20%
16%
16%
14%
20%
14%
13%
10%
15% 15%
9%
6%
10% 10%
5%
5%
0%
Apollo Max Health Narayana Narayana 0%
Chennai^ Bangalore Kolkata Apollo^ Max Health Narayana
Source: Companies; ^ Apollo Hospitals – EBITDA adjusted for clinician pay-outs in Source: Companies; ^ Apollo Hospitals – EBITDA adjusted for clinician pay-outs in
revenue; Apollo Hospitals margin assumed at 26% for Chennai cluster. EBITDA revenue; EBITDA margin is post IND AS FY20 onwards
margin is post IND AS FY20 onwards
Exhibit 27: Higher ARPOB in Tier I metro cities Exhibit 28: ~55% international patients in Delhi, Mumbai
(Rs/ Day) ARPOB (000' Rs/day)
60
50 Others
50 45 46 Hyderabad
42 (5-7%)
40
33 Delhi NCR
30 (42 - 45%)
Mumbai
20 (10-12%)
Chennai (22
10 - 25%)
0
Delhi NCR Mumb ai Ch en nai Bangalore Hyderab ad
Source: Max Healthcare annual report, Company, Axis Capital Source: Max Healthcare annual report, Company, Axis Capital; Data as of 2017
December 14, 2021 8

Initiating coverage
Exhibit 29: Favorable regional dynamics… Exhibit 30: …given gap in quality beds availability
Total beds per '000 population Quality beds* per '000 population
4 3.6 1.0
(Nos of (Nos of
beds) beds) 0.8 0.8
3.1 0.8
3
2.5 0.6
2.2 0.6
1.9 0.4 0.4
2
0.4
1 0.2
0.0
0 Delhi NCR Mumb ai Ch en nai Bangalore Hyderab ad
Delhi NCR Mumb ai Ch en nai Bangalore Hyderab ad
Source: Max Healthcare annual report, Company, Axis Capital Source: Max Healthcare annual report, Company, Axis Capital
Exhibit 31: Matured beds with high margin drive operating performance
Matured hospitals drive operating
(% of bed share) FY20 FY21 performance led by centre of
1.2 excellence and better occupancy.
100% 100% 100% 100% Improving payor mix to drive higher
1.0 92% 91%
87% ARPOB and EBITDA margin
82%
0.8 73% 71%
0.6
0.4
0.2
0.0
Max Health# Fortis Narayana Aster DM Apollo Hosp
Exhibit 32: Occupancy higher in matured clusters Exhibit 33: Higher ARPOB in metros/ matured hospitals
FY20 FY21 H1FY22 (Rs per day) FY20 FY21 H1FY22
100% 60,000
(%
occupancy) 78% 50,000
80% 73%
59% 60% 65% 62% 61% 40,000
60%
48% 46% 30,000
40%
20,000
51,100
50,800
55,100
47,151
49,115
54,494
36,184
46,479
52,218
31,781
34,247
38,219
24,932
24,932
29,589
20% 10,000
0% 0
Apollo Chennai^ Max Health Apollo AP^ Max Apollo Apollo AP^ Narayana Narayana
Health Chennai^ Bangalore Kolkata
Source: Companies; ^ Apollo Hospitals occupancy for Chennai and Andhra Source: Companies; ^ Apollo Hospitals occupancy for Chennai and Andhra Pradesh
Pradesh clusters clusters
December 14, 2021 9

Initiating coverage
Exhibit 34: EBITDA margin improving for Max Healthcare

EBITDA margin for Max Healthcare
Apollo Aster Max Health Fortis Narayana
improving led by better operating
30% metrics (higher ARPOB, better case
(EBITDA margin %)
mix and occupancy coupled with
25%
improved payor mix) and presence
20% in metro cities (Delhi NCR and
15%
Mumbai)
10%
5%
0%
Source: Companies, Axis Capital; For Apollo Hospital, EBITDA adjusted for clinician pay-outs in revenue; FY20 represents Max
healthcare + partnered healthcare facilities and demerged business of Radiant Life. FY21 includes sales of Radiant Life and 10
months of Max Healthcare as part of demerger scheme; EBITDA margin is post IND AS FY20 onwards
Exhibit 35: EBITDA per bed for Max Healthcare higher vs. peers
EBITDA per bed for Max
FY20 FY21 H1FY22 Healthcare is highest among
5 comparable peers. Increase in
(Rs mn)
EBITDA per bed is largely
3.8
4 supported by higher ARPOB,
presence of hospitals in metros,
3
2.4 improved case and payor mix. This
2 1.7 1.7 1.7 coupled with better cost
1.4 1.4 1.2 management led to growth in
0.9 0.8 0.7 1.0
1 0.7 0.7
0.3 EBITDA per beds.
0
Apollo Max# Aster Fortis Narayana
Source: Companies, Axis Capital, Note: EBITDA for hospital business, Max Healthcare EBITDA adjusted for one-offs and
vaccination revenues, Aster DM EBITDA is for India business.
Exhibit 36: RoCE improving led by increasing EBITDA Exhibit 37: RoCE improving for Max Healthcare
FY20 FY21 H1FY22 FY20 FY21 H1FY22
35% 35%
30% 30%
30% 26% 30% 26%
25% 25% 21%
20% 20%
15% 14%
15% 11% 15% 11% 10%
10% 8% 10% 8%
4%
5% 1% 5% 2%
0% 0%
RoCE Adjusted RoCE Apollo^ Max Health Fortis
Source: Companies; For adjusted RoCE, Capital employed excludes impact of Source: Companies; Indicative company level RoCE; Apollo RoCE is as published in
Purchase price allocation on capital employed consequent to merger with Radiant Q2FY22 earnings update for standalone financial performance. Fortis EBIT computed
and current quarter acquisition; Also excludes short term FDRs; Depreciation has from group consolidated P&L
been considered based on normalized replacement capex
December 14, 2021 10

Initiating coverage
Company structure and overview

Exhibit 38: Hospital network post-merger
Source: Company; MHIL – Max Healthcare Institute Limited; CRL – Crosslay Remedies Limited; HBPL – Hometrail Buildtech Private Limited
Exhibit 39: Max Healthcare hospital network

Occupancy Occupancy Beds
Network Hospital FY20 FY21 Capacity (Nos)
Max Super Speciality Hospital, (West Block) Saket# 73% 63% 201
Max Super Speciality Hospital, Vaishali 76% 66% 378
Max Super Speciality Hospital, Shalimar Bagh 75% 74% 280
Max Healthcare Max Super Speciality Hospital, Mohali 69% 69% 220
Max Super Speciality Hospital, Dehradun 74% 71% 201
Max Super Speciality Hospital, Bhatinda 52% 47% 200
Max Hospital, Gurugram 71% 68% 72
Total - - 1,552
Dr. B L Kapur Memorial Hospital - O&M 71% 59% 540
Radiant Life
Dr. Balabhai Nanavati Hospital - O&M 64% 61% 328
Total - - 868
Partnered Max Super Speciality Hospital, Patparganj - Balaji 82% 68% 402
Healthcare Max Super Speciality Hospital, (East Block) Saket - Devki Devi Foundation# 73% 63% 320
Facilities (PFA) Max Smart Super Speciality Hospital, Saket - Gujarmal Modi 70% 69% 250
Total - - 972
Max Healthcare Network 72% 65% 3,392
Operated by Crosslay Remedies; offers chemotherapy,
Max Multi Speciality Centre, Noida ophthalmology, diabetes clinic and day care surgeries,
preventive health check-ups and outpatient facilities.
Medical centre comprises day-care surgeries and
outpatient facilities with specialties such as
Max Healthcare Max Multi Speciality Centre, Panchsheel Park
ophthalmology, IVF, dental and offers basic pathology
and radiology diagnostic services.
Authorized panel site for immigration checks for certain
Max MedCentre, Lajpat Nagar – Immigration Department countries such as Australia, Canada, US, New Zealand
and UK
Devki Devi Max Institute of Cancer Care, Lajpat Nagar Standalone oncology day-care centre
Source: Company, Axis Capital; # Blended occupancy for Saket complex – Individual hospital wise occupancy not available

Initiating coverage
Exhibit 40: Max Healthcare, partnered healthcare facility and Max Healthcare network – key financials
Particulars Hospital Year Operating beds (Nos) Occupancy (%) Sales (Rs mn) EBITDA (Rs mn) EBITDA margin (%)
FY20 2,262 NA 29,431 4,249 14.4%
Max Healthcare Max + Radiant FY21 2,291 NA 26,830 4,439 16.5%
H1FY22 2,296 NA 20,190 5,170 25.6%
Balaji FY20 401 82% 4,567 572 12.5%
FY21 401 68% 3,940 600 15.2%
H1FY22 401 NA 2,750 680 24.7%
GM Modi FY20 250 70% 2,757 236 8.6%
Partnered
FY21 238 69% 2,550 300 11.8%
Healthcare Facility
H1FY22 238 NA 1,730 270 15.6%
Devki Devi FY20 320 NA 5,550 489 8.8%
FY21 320 NA 5,330 640 12.0%
H1FY22 320 NA 3,690 780 21.1%
FY20 3,233 73% 39,907 5,571 14.0%
Max Healthcare network FY21 3,250 65% 36,020 5,645 15.7%
H1FY22 3,255 77% 26,610 7,060 26.5%
Source: Company, Axis Capital; Note: Assumed same number of operating beds in H1FY22 or partnered healthcare facilities; FY20 represents Max Healthcare and demerged
business of Radiant Life. FY21 includes sales of Radiant Life and 10 months of Max Healthcare as part of demerger scheme
Focus on improving operating performance

Max Healthcare has seen EBITDA margin improvement in last two years since change in
management post merger of Max Hospitals and Radiant – management control under Mr. Abhay
Soi.
 In FY20, Radiant in partnership with its funding firm Kohlberg Kravis Roberts ("KKR"),
acquired stake in Max Healthcare Institute through Kayak Investments Holding Pte Ltd
("Kayak") from the previous promoters.
 Post-acquisition, Abhay Soi and Kayak were the promoters of Max Healthcare and Max
promoters reclassified as public shareholders. Kayak further acquired 4.99% stake in
Max Healthcare from Max promoters.
Exhibit 41: Management structure – controlling stake with Abhay Soi and KKR
Shareholding pattern % holding
Mar-20 Sep-20 Mar-21 Sep-21
Kayak Investments Holding Pte. Ltd. 47% 52% 49% 38%
Mr. Abhay Soi 23% 23% 22% 23%
Max India 12% 2% 0% 0%
Public and others 18% 23% 30% 39%
Max Healthcare completed an equity fund raise of Rs 12 bn through a QIP in Mar’21 and 61.41 mn
shares were issued at Rs 195.40 per share; accordingly, % holdings for the promoters has changed
in Mar’21.
Mr. Abhay Soi has a successful track record of restructuring – Dr. B L Kapur Hospital, a leading
Delhi hospital and turnaround of Mumbai’s Dr. Balabhai Nanavati Hospital. He has also initiated
the turnaround of Max Healthcare − EBITDA increased by over 70% in FY20/21 with strong
margin expansion in H1FY22.
The financial backing by KKR with extensive global experience and expertise in healthcare
investments have helped Max Healthcare in financial management and efficient capital allocation.
Max Healthcare management team has made multiple successful acquisitions including BLK,
Nanavati and Max Hospitals – which provides comfort on its ability to turnaround assets post
M&A. The company has also acquired land parcel at Saket, Delhi and Gurugram, Haryana for new
hospitals.
EBITDA margin of Max Hospitals has improved to 26.3% in Q2’22 (adjusted for one-offs) from
11.6% in Q1’20. EBITDA margin expansion to 26.5% in H1FY22 (from 8.9% in FY19), improvement
was driven by (1) ~Rs 2.22 bn worth of initiatives implemented with ~Rs 1.4 bn flowing in EBITDA

Initiating coverage
in FY20 and (2) FY21 EBITDA has full year impact of the structural performance improvement
initiatives implemented in FY20 of Rs 800 mn. New structural cost initiatives worth ~Rs 1.08 bn in
FY21 were implemented with an impact of ~Rs 730 mn on FY21 EBITDA.
Exhibit 42: Sales improving in last 2 years

Sales YoY growth (RHS)
(Rs mn) (% margin)
50,000 131 160
40,000 120
54 80
30,000 39
11 8 40
7
20,000 -15
0
-41
35,990
39,907
14,340
11,600
11,610
10,000
13,850
(40)
9,440
6,170
0 (80)
FY19 FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22
Source: Company, Axis Capital; Q1FY22 and Q2FY22 include sales from Covid vaccination income
Exhibit 43: EBITDA improvement over last 2-3 years

EBITDA EBITDA margin (RHS)
(Rs mn) (% margin)
23.2 24.2 27.2 26.8
6,000 9.7 14.0 16.2
-3.8 20
5,000
4,000 (30)
3,000
(80)
2,000
2,520
2,630
3,480
5,571
3,590
3,620
1,430
1,000
-220
(130)
0
FY19 FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22
(1,000) (180)
Source: Company, Axis Capital; Q1FY22 and Q2FY22 include EBITDA from Covid vaccination income
Performance improvement over FY19 to FY20 driven by:

 ~Rs 2,200 mn worth of initiatives implemented
 ~Rs 1,400 mn flowing in EBITDA in FY20
 Increased high-end tertiary and quaternary procedures with hiring of new senior
clinical teams
Sharp recovery over FY21 and H1FY22 driven by:

 Normalization of non-Covid IPD admissions and OPD footfalls in Q2FY22.
 New structural cost initiatives worth ~Rs 1.08 bn were implemented with ~Rs 730 mn flowing
into EBITDA in FY21.
 Full year impact of initiatives implemented in FY20, amounting to ~Rs 800 mn, on FY21
EBITDA
Post-acquisition, Max Healthcare’s focus was on (1) realignment of roles and responsibilities,
leading to personnel cost optimization, (2) reduction in corporate overheads, (3) renegotiation of
contracts across material and other indirect costs and (4) transient cost management initiatives
during the onset of Covid-19 pandemic.

Initiating coverage
Exhibit 44: Cost controls led by structural initiatives

(Rs mn) Indirect costs % of net sales (% of sales)
5000 70%
58%
60%
4000
45% 43% 42% 42% 43% 50%
3000 36% 36%
32% 32% 40%
2000 30%
20%
4,410
4,250
3,330
3,750
3,910
4,250
4,332
4,218
3,860
4,380
1000
10%
0 0%
Q2FY20
Q3FY20
Q1FY21
Q2FY21
Q4FY21
Q1FY22
Q1FY20
Q4FY20
Q3FY21
Q2FY22
For FY22, the key priorities for the company are (1) improve average revenue per occupied bed
per day, (2) improve occupancy rates and equipment utilization at hospitals, and (3) maximize
efficiencies through greater integration, better supply chain management and human resource
development.
Going ahead, we expect growth to be driven by

 Steady improvement in occupancy across hospitals on easing travel restriction
 improving local, inter-state and international patient flow
 increase in high end complex surgery cases
 resulting in better occupancy and higher ARPOB

Initiating coverage
Max Healthcare – Multiple drivers for growth

Near term drivers
1. Focus to improve case mix with increase in tower specialties

Max Healthcare is focusing on investing in medical technology, attracting skilled physicians and
surgeons, and developing expertise in tertiary care areas. This will help it to add sophisticated
procedures and hence improve case mix.
Exhibit 45: Share of tower specialty improving

Increase in demand post Covid led
Total tower specialty to delays in treatment and increase
80% in critical surgeries which could not
(% share) be delayed. Over the last few
quarters, the tower specialty for
60%
the company has improved and
focus remains on better traction
40%
66% 66% 68% 65% 65% from such high-end surgeries to
59%
53% 52% 48% improve the case mix.
20%
0%
Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22
Source: Company, Axis Capital, Note: Tower specialty includes Oncology, Cardiac sciences, Neuro sciences, Orthopedics,
Renal sciences, Liver and biliary sciences
Exhibit 46: Tower specialty – oncology, cardiac, Neuro remain high and steady
Within tower specialty, the share of
(% share) Oncology Cardiac sciences Neuro sciences Orthopedics Renal sciences
critical care treatment like
100% oncology, cardiology and neurology
10% 9% 9% 9% 8% 7% 9% 7% 9%
remains high. This provides better
80% 10% 10% 4% 5% 6% 9% 5% 10%
11% growth visibility coupled with
10% 8% 9% better margin given high-end
10% 11% 10% 8% 10%
60% 10%
10% tertiary care treatment share in
10% 10% 9% 12%
12% 13% 15% 14% business improving.
40%
20% 24% 20% 18% 17% 22%

21% 21% 20% 20%
0%
Focus is to build on upcountry markets to improve share of high-end tertiary care procedures as
patients travel from far-flung areas to metro cities, such as Delhi-NCR to get high-end treatments.
MHIL gets flow of patients from all of North India, including Uttar Pradesh, Bihar, Jharkhand,
Punjab, Haryana, Rajasthan and other key states.
Strategy is to deepen its reach across the country by penetrating into new cities or regions and
establishing sales offices or OPD centres to cater to the local population and refer to its tertiary
care facilities for high-end procedures.
Focus on high end treatment across tower specialty (Onco, Neuro, Cardiac etc) with advance
medical technology like Advanced robotics provides high precision and enables minimal invasive
surgery.

Initiating coverage
Exhibit 47: High end quaternary care facilities including 3 JCI accredited
Source: Company, Axis Capital, Note: *Run rate basis Q2FY22, given rest of Q1FY22 was adversely impacted by Covid-19 pandemic. (1) Transplants include kidney, heart, liver,
lung, etc. | (2) Includes Cardiac Surgery, Cardiac Paed. Surgery, Vascular Surgery, Angioplasty, Angiography and Other Cardiac Procedures | (3) Includes Surgical and Spinal
Surgeries | (4) Includes Joints and Other surgeries | (5) Includes Onco Surgical and bone marrow transplant (BMT)
Exhibit 48: Specialty mix for Max Healthcare

Specialty mix (Nos) Max HC Apollo Aster DM
Transplant 860 870 480
Robotics 1,030 750 100+
Cardiac 39,400 5,400 2,200
Neuro 8,450 23,000 3,300
Ortho 23,500 20000# 16,100
Onco 10,400 68,000 NA
Source: Companies, Axis Capital; Max Healthcare as per Nov’21 company presentation. Apollo Hospitals and Aster DM as per
FY21 annual report
2. Increase in occupancy across network for volume growth

Max Healthcare has limited scope to increase its hospital bed capacity for FY22/23 as first phase
of expansion would commence from mid of FY24. Hence, in the near term, the focus is to improve
utilization of existing beds with increasing occupancy across the network. In FY20 and FY21,
occupancy was impacted due to Covid and higher share of Covid allotted beds.
Over last few quarters with reducing number of Covid cases, the non-Covid occupancy has started
inching up. Max Healthcare expects occupancy to improve to 77-78% in FY22 and further in FY23
and FY24 with optimal target of 80%+ occupancy across the network. Improvement in occupancy
and change in case mix with improving share of tower specialties to support the growth.
Exhibit 49: Occupancy improving post impact of Covid in FY21

Non-Covid occupancy declined
Occupancy (%) over Jan-Mar’21 given strong
90% 81% impact of second wave of Covid;
72% 73% 72% 73% 75% post reduction in Covid infection
80% 71% 70%
65% cases, the occupancy improved
70%
60% significantly in H1FY22.
50%
40%
30%
20%
10%
0%
FY16 FY17 FY18 FY19 FY20 FY21 Q4FY21 Q1FY22 Q2FY22

Initiating coverage
3. Improvement in ALOS for better utilization of beds

Clinical excellence is getting critical as newer technologies evolve and clinical results improve,
patients are staying in the hospital for shorter period of time. Continuous lowering of Average
Length of Stay (ALOS) improves efficiency and profitability.
Exhibit 50: ALOS improving post Covid impact in FY21 and H1FY22
Improving case mix, reduction in
ALOS (Days) Covid allotted beds and focus on
7
5.9 center of excellence to help
6 5.20 improve ALOS.
5 4.40 4.6
4.20 4.30 4.3
4 3.39 3.25
3
2
1
0
4. Focus on payor mix – increase in cash + insurance + international patients mix

The company intends to improve its channel mix by improving share of international, cash walk-in
and private and public insured patients who have procured insurance coverage from third party
insurance providers as these patients tend to provide higher average revenue per patient for
similar procedures compared to central as well as state government and local body patients, due
to tariff differences.
Exhibit 51: Focus to improve self-paid (cash) patients

Bed capacity share (%) Revenue share (%)
% share FY20 FY21 H1FY21 FY20 FY21 H1FY21
Self-Pay, TPA and Corporate 58% 64% 67% 67% 73% 75%
International 8% 2% 2% 11% 4% 4%
Institutional 34% 34% 31% 22% 23% 21%
Source: Company
Exhibit 52: Payor mix improving towards cash and insurance

Focus to improve the payor mix is
(% share) Self pay TPA & corporates International Institutional Cash + Insurance visible in recent past as share of
77% 74% cash and insurance combined has
67% 67% 67% 72% 75% 74% 70%
increased to ~74% (as % of sales) in
21% 22% 22% 25% 24% 22% 24% 18% 23% Q2FY22 vs ~67% in FY20.
2% 4% 5%
12% 11% 11% 3% 6% 4%
29% 33% 34% 31% 39% 35%

26% 25% 26%
41% 42% 41% 43% 42% 39% 40% 38% 38%

Initiating coverage
Exhibit 53: International patient flow impacted during Covid; expects improvement
Easing of travel restrictions will
(% share) International lead to improvement in flow of
14% international patients which in turn
12%
12% 11% 11%
to improve both case mix and
ARPOB in near term.
10%
8%
6%
6% 5%
4%
4%
4% 3%
2%
2%
0%
Better ALOS, payor mix and improving case mix provides visibility for ARPOB growth
Exhibit 54: ARPOB improving over last few years

Improvement across operating
ARPOB metrics like increasing occupancy,
70,000
(Rs/Day) reduction in ALOS and improving
56,900 59,000
60,000 case as well as payor mix – coupled
51,000 51,000 51,500
50,000 43,946 45,800 with the presence in the Tier-I
40,902 41,892
metro cities (~80%+ bed capacity in
40,000
Delhi NCR and Mumbai) – helped
30,000
the company see strong and steady
20,000 ARPOB in the last few years
10,000 (specifically post the management
0 change in FY20/21).
Exhibit 55: ARPOB over last few quarters has improved with better case/ payor mix
Few of the leading hospital
ARPOB companies have indicated Tier-I
70,000 (Rs/day) city base hospitals are having
56,900 59,000
60,000 54,000 ARPOB in range of Rs 60,000+ per
49,700 50,800 51,200 51,500
50,000 47,000 46,400 day. Hence Max Healthcare with
~84%+ bed capacity in metro Tier-I
40,000
city can see further improvement
30,000 or can sustain the ARPOB in near
20,000 term.
10,000
0

Initiating coverage
Mid-to-long term growth drivers
5. Brownfield expansion in existing facilities

Max Healthcare has a total bed build-out potential of ~900 beds through its brownfield expansion
and extension capabilities excluding 1,100+ additional beds in partner healthcare facilities. The
company aims to explore setting up of more hospitals over next 4-5 years and at the same time add
incremental beds as extensions or additional wings in some of its existing facilities. This will help
increase capacity and ramp up operations quickly in already established facilities.
Exhibit 56: Improving occupancy – implies requirement of capacity expansion

Hospital Occupancy FY20 Occupancy FY21 Beds Capacity (Nos)
Increase in occupancy provides
BLK 71% 59% 540 scope for operational bed
Saket 73% 63% 521 expansion. ~1,800+ beds addition
Patparganj 82% 68% 402
Vaishali 76% 66% 378 plan at Saket complex, Delhi (1,200
Nanavati 64% 61% 328 beds) and 650 beds at Nanavati,
Shalimar Bagh 75% 74% 280
Mumbai – over next 5-7 years
Smart 70% 69% 250
Mohali 69% 69% 220 (Phase I in next 2-3 years).
Dehradun 74% 71% 201
Bhatinda 52% 47% 200
Gurugram 71% 68% 72
MHC 72% 65% 3,392
Max Healthcare has existing valuable land bank which will enable it to add 3,300+ beds through
brownfield and greenfield expansion. In Oct’21, Max Healthcare board approved the expansion
initiative through purchase of two parcels of land admeasuring ~ 5.26 acres and ~ 6.11 acres
located in Gurugram (Haryana) at Sector 56 and Sector 53 respectively. The land was offered to
the company for allotment on freehold basis for setting up two hospitals, following acceptance of
its bids made under the e-auction of Institutional Properties arranged by Haryana Shehri Vikas
Pradhikaran (“HSVP”), subject to the terms & conditions prescribed under the Letter of Intent
issued by HSVP.
The company expects regular maintenance capex of ~Rs 1.6 bn per year. Land cost for greenfield
project in Gurugram would be ~Rs 1.8 bn, which is expected to be paid by FY22 end. For Mohali,
Nanavati and Saket complex (settled dispute with Vikrant foundation), the company already has a
land bank for the expansion which helps it to reduce capex per bed to Rs 10-15 mn.
 Gurugram expansion: Max Healthcare already has one hospital (Alfa Hospital with 72 bed
capacity). It plans to expand its bed capacity in NCR region by addition of two hospitals of
~500 beds each in Gurugram. This will significantly ramp up its existing footprint in NCR
region.
 Nanavati hospital: plans to add ~440 net beds spread over 3.9 acres of land in the Nanavati
Max Hospital located in the heart of Mumbai. Addition of ~339 beds in phase 1 by Q3FY25 as
part of a new block. Demolition of ~160 beds before commencement of Phase 2. Addition of
~271 beds in phase 2 by Q3 FY27. Bed expansion to aid EBITDA margin expansion and enable
spreading of employee cost over a larger base.
 Saket complex, Delhi: Plans to create 2,300+ beds contiguous medical hub spread over
23 acres of land in the heart of South Delhi. This will be enabled by augmentation of existing
~770 beds with – (1) ~1,100 additional beds in Max Smart in four phases as per current
brownfield expansion plans, and (2) ~500 beds at Vikrant Foundation over two phases.
Adding about 100 beds in Shalimar Bagh; expects to commence in Q3/Q4FY22 – operational
by FY23 end. Mohali hospital adding 190 beds and expects to commence in Q3FY22 –
operational by FY23 end.

Initiating coverage
Exhibit 57: Doubling bed capacity over FY22-27

Hospitals Existing beds # of beds Total Likely construction Likely commencement Total Capex
commencement by of operations (Rs mn)
Brownfield projects
Max Shalimar Bagh, Delhi 280 100 380 Commenced in Sep'21 H2FY24 1,120
Max Mohali, Punjab 220 190 410 Q4FY22 H2FY24 1,990
Max Smart, (Saket Complex) -1 250 350 600 Q4FY22 H1FY25 6,840
Nanavati Max, Mumbai -1* 328 329 657 Q4FY22 H2FY25 4,350
Vikrant Foundation, (Saket Complex) - 300 300 Q4FY24 H1FY26 3,600
Max Smart, (Saket Complex) -2 - 250 250 Q2FY25 H1FY27 2,300
Nanavati Max, Mumbai – 2* - 271 271 Q2FY25 H2FY27 2,830
Vikrant Foundation, (Saket Complex) -2 - 200 200 on or after FY28 NA 2,400
Others 2,314 - 2,314 NA NA -
Total Brownfield projects 3,392 2,490 5,882 30,380
Greenfield Projects
Gurugram Sector 56** - 500 500 Q4FY23 H1FY26 6,700
Gurugram Sector 53** - 500 500 on or after FY28 NA 6,700
Total Greenfield Projects** - 1,000 1,000 13,400
Overall total 3,392 3,490 6,882 43,780
Source: Company, Axis Capital; Note: * ~160 beds need to be demolished before commencement of Phase 2, ** Excludes land cost | Above exclude routine capex. Others include
hospital beds across Delhi, Punjab and Dehradun
Exhibit 58: Capex outlay and expansion plan for bed addition across hospital network
(Rs mn) # of beds Likely Likely FY22 FY23 FY24 FY25 FY26 FY27 FY28 & Total
construction commencement onwards
commencement by of operations
Brownfield projects
Commenced in
Max Shalimar Bagh, Delhi 100 H2FY24 80 500 430 110 - - - 1,120
Sep'21
Max Mohali, Punjab 190 Q4FY22 H2FY24 30 800 960 200 - - - 1,990
Max Smart,
350 Q4FY22 H1FY25 900 1,800 1,500 2,350 290 - - 6,840
(Saket Complex) -1
Nanavati Max, Mumbai -1* 329 Q4FY22 H2FY25 750 1,100 1,350 710 440 - - 4,350
Vikrant Foundation,
300 Q4FY24 H1FY26 120 660 900 1,560 360 - - 3,600
(Saket Complex)
Max Smart, (Saket

250 Q2FY25 H1FY27 - - - 300 400 470 1,130 2,300
Complex) -2
Nanavati Max,
271 Q2FY25 H2FY27 - - - 450 800 1,300 280 2,830
Mumbai – 2*
Max Smart,
300 on or after FY28 NA - - - - - - 2,250 2,250
(Saket Complex) -3
Max Smart,
200 on or after FY28 NA - - - - - - 2,700 2,700
(Saket Complex) -4
Vikrant Foundation,
200 on or after FY28 NA - - - - - - 2,400 2,400
(Saket Complex) -2
Total Brownfield projects 2,490 1,880 4,860 5,140 5,680 2,290 1,770 8,760 30,380
Greenfield Projects
Gurugram Sector 56** 500 Q4FY23 H1FY26 - 1,600 1,550 1,900 1,650 - - 6,700
Gurugram Sector 53** 500 on or after FY28 NA 6,700 6,700
Total Greenfield
1,000 - 1,600 1,550 1,900 1,650 - 6,700 13,400
Projects**
Overall total 3,490 1,880 6,460 6,690 7,580 3,940 1,770 15,460 43,780
Source: Company, Axis Capital; * ~160 beds need to be demolished before commencement of Phase 2, ** Excludes land cost | Above exclude routine capex

Initiating coverage
Exhibit 59: Expansion plans across leading hospital players

Company Key expansion plan
 Completed acquisition of balance 50% in Apollo Gleneagles Hospital, Kolkata, from IHH Group (JV partner) for
consideration of Rs 4.1 bn
 In Q4FY21, increased stake in Apollo Medics, Lucknow to 51% (vs 50% as of Sep’20) to make it a subsidiary of
Apollo Hospitals
 Focus to expand in North and East region; M&A opportunities – targets hospital assets with 300-500 bed capacities;
Apollo Hospitals In Nov'21, entered into Definitive Agreements for the acquisition of a 64% majority stake in Asclepius Hospitals and
Healthcare Pvt Ltd which runs a 180 bedded profitable multispecialty hospital Excelcare Hospital in Guwahati for
an Enterprise value of Rs 2.1 bn.
 Focus on expansion across its digital capability – Apollo 24/7; targets ~5,000 retail stores by FY25/26 (vs 4,292 in
H1FY22)
 Network expansion in AHLL; focus on organic expansion for its Diagnostic business
 Looking to expand hospitals in India – Maharashtra, Chennai, Bangalore and Kerala; 411 beds planned in the next
18 months
 Expanding presence in Pharmacy distribution business – acquired Hindustan Drug; Targets to start ~130
Aster DM pharmacies in India by FY22 end (~30 store as of Jun'21)
 Expansion in Clinics business – Aster Labs – targets to start ~23 labs in FY22
 In GCC, expects to add 225 beds in near term
 Cayman Island capex is on track and the company sees it as a natural extension of its GCC hospital business
 In Aug'21, acquired exclusive rights to aid development and provide medical services to a 500-bed hospital to be
built on a 3.5 acres of a prime land parcel in Saket (South Delhi). 250 beds will be commissioned in the first phase by
FY24 end
Max Healthcare
 Looking to double its bed capacity over FY22-27
 Focusing on expanding presence in clinics business through Max Labs and Max homecare – looking to expand
the network
Narayana  No major expansion plans in near term
 Looking to expand overall bed capacity (Occupancy at ~60% in H1FY22)

Fortis
 Completed DDRC acquisition in Kerala and continues to look for M&A in diagnostic business
6. Inorganic growth opportunities with proven turnaround record

Max Healthcare opportunistically looks at acquisitions, operations and management
arrangements, and other medical services agreements, among others, in the Indian market in line
with its existing expansion strategy. This will help in expanding customer base in existing markets
and reducing time to market in new cities. For this, Max Healthcare’s focus would be primarily the
metros and tier 1 cities across India.
Max Healthcare management team has done multiple successful acquisitions including BLK (in
2009-10), Nanavati (in 2014-15) and Max Hospitals (in 2020) – which provides comfort on its
ability to turnaround assets post M&A.

Initiating coverage
Exhibit 60: BLK hospital sales growth trend Exhibit 61: EBITDA margin trend
BLK Sales EBITDA EBITDA margin (%) (RHS)

8,000 (Rs mn) 7,090 1,600 30%
(Rs mn) 21%
5,990 17% 19% 18%
13% 20%
6,000 1,200
5,020 5,210 8% 10%
4,480 10%
3,780 800 1%
4,000
2,830 0%
370
-9%
240
2,130 400
1,070
1,140
1,290
2,000 1,250 -10%
580
890
20
740 -20%
0
-20%
(110)
0
(150)
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (400) -30%
FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20
Exhibit 62: Nanavati hospital sales trend Exhibit 63: EBITDA turnaround post acquisition
Nanavati Sales EBITDA EBITDA margin (%) (RHS)
4,000 3,580 400 7% 10%

(Rs mn) (Rs mn)
3,280 4% 4%
2,980
3,000 200 0%
2,400
0%
260
-4%
140
110
1,850
10
2,000
1,500 0
(80)
-15%
1,000 -10%
(200)
(230)
0
FY15 FY16 FY17 FY18 FY19 FY20 (400) -20%
FY15 FY16 FY17 FY18 FY19 FY20
Exhibit 64: Even Max Hospitals saw steady sales Exhibit 65: Margin improved post management change
Sales EBITDA maergin

50,000
(Rs mn) 30 26.5
39,907 (% margin)
40,000 35,990 36,020 25
30,000 26,610 20
24,340 25,954 15.7
14.0
15 11.5
20,000 9.7
8.5
10
10,000
5
0 0
FY17 FY18 FY19 FY20 FY21 H1FY22 FY17 FY18 FY19 FY20 FY21 H1FY22
Source: Company, Axis Capital; FY17/18 for Max Hospitals (before acquisition) Source: Company, Axis Capital; FY17/18 for Max Hospitals (before acquisition) and
and FY19/20 proforma (Max + Radiant) FY19/20 proforma (Max + Radiant)

Initiating coverage
Exhibit 66: Improving operating CF and FCF Exhibit 67: Net debt declining across companies
(Net debt
Operating CF Capex FCF Rs bn)
FY20 FY21 H1FY22
4,000 3,727 35
(Rs mn) 31
30 28
3,000 2,617
25
20
2,000 19 19
20
1,179 14
771 15 11
1,000 10
10 8 9
5 6 5
0 5 3 2
(130) (6)
0
(1,000)
FY20 FY21 H1FY22
Source: Company, Axis Capital, Companies, Axis Capital; Note: Max Healthcare Source: Company, Axis Capital
FCF for FY20 excludes ~Rs 21 bn for the purchase of Max Healthcare equity share
by Radiant Life and H1FY22 excludes Rs 601 mn for acquisition of subsidiary
Asset-light model with real estate investment trusts (REITs) for future expansion
Max Healthcare’s core competence lies in providing healthcare services ranging from primary care
to quaternary care. In addition to its plan of brownfield capacity expansion, it seeks to move
towards an asset light model for the delivery of healthcare services through operations and
management contracts, which will enable it to focus on its core healthcare operations and key
medical competencies. For this strategy, the company is looking to enter into partnership with real
estate developers who could build the hospital facilities as per Max’s specifications and it would
then operate and manage the hospital facilities by leveraging its brand equity and expertise in
healthcare services.
Exhibit 68: Asset-light model with real estate investment trusts (REITs)
Source: Company
Invest and grow Pathology and Home Care Business

Scale up in its MaxLab and Max@Home businesses to provide healthcare services outside the
healthcare facilities; the company plans to build on both these adjacencies. For MaxLab, its initial
focus is to deepen and widen the presence in the cities wherein Max Healthcare already has a
presence through network facilities. In the long term, it plans to expand into new cities and grow
the business by opening new collection centres, partnering with local collection centres for sample
collection and signing new hospital lab management contracts.

Initiating coverage
Exhibit 69: Over 13x revenue growth in 4 years for Max Labs
Max Healthcare’s non-captive
Gross revenues business under Max Labs has seen
800 strong traction over last few years
(Rs mn) 676 (~91% gross revenue CAGR over
700
570 FY17-21 to Rs 676 mn in FY21). As
600
of Sep’21, Max Labs has 220+
500 409 Partner-run collection centres, 13
400
Company owned collection
300 243
centres, 135+ Phlebotomist at Site
200 131 (PAS), 200+ Pick-Up Points (PUPs),
100 51
19+ Hospital based Lab
0 Management (HLMs), 20+ Cities of
FY17 FY18 FY19 FY20 FY21 H1FY22 operations and offers 1,900+ test
Source: Company, Axis Capital portfolio.
Using the power of digitization, Max@Home plans to technologically enable and automate existing
customer acquisition channels within Max Healthcare network by allowing customers to directly
place a home care request over multiple online mediums during their visit to the hospital, among
others, in order to grow its Max@Home brand. Also, it intends to utilize MaxLab and Max@Home’s
plug and play approach to provide new services and scale its digital business for future growth.
Exhibit 70: Steady growth trend in GMV Exhibit 71: Sales normalizing as Covid impact weans
Gross Merchandise Value Net revenue
600 540 400 350

(Rs mn) (Rs mn)
500
300 240
400 340 340 220
270 170
300 200
210 140
200 143 102
100
100
0 0
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Exhibit 72: Covid share declined in Q2FY22… Exhibit 73: …led to decline in sales
(% of Covid Non Covid (% of Covid Non Covid

sales) sales)
100% 100%
80% 48% 80% 43% 44%

55% 52%
63% 70%
60% 82% 77% 85% 60% 77% 82%
40% 40%
52% 48% 57% 56%
20% 37% 45% 20%
23% 23% 30%
18% 15% 18%
0% 0%
Q1FY21Q2FY21Q3FY21Q4FY21Q1FY22Q2FY22 Q1FY21Q2FY21Q3FY21Q4FY21Q1FY22Q2FY22
Gross Merchandise Value Net revenue

Initiating coverage
Exhibit 74: Margin impacted on decline in Covid sales Exhibit 75: Volume increased and steady realization
EBITDA EBITDA margin (RHS) No. of Bills (‘000) Average realization per bill (Rs)
80 21.1% 25% 400 1,214 1,400

(Rs mn) 18.8% 350 1,118
20% 1,010 956 1,200
60 300
15% 789 1,000
9.4% 250 732
40 7.1% 800
1.8% 10% 200
20 5% 600
150
-4.9% 10 45 16 74 4 0% 100 400
0
-5% 50 200
84 139 218 219 366 301
-20 (5) -10% 0 0
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
7. Focusing on digital initiatives to create integrated service platform

Covid-19 necessitated the need for adoption of digital technologies in the healthcare system and
in the post-Covid 19 world, digital healthcare will be the new normal. In view of the same,
Max Healthcare has taken range of digital initiatives to realize efficiency and ease the delivery of
healthcare services.
Max has launched digital platform. Key features –

 Video consultation platforms were launched to connect patients and doctors remotely
 The patients can book appointments, make payments and upload their documents using the
mobile app
 The doctors can review uploaded documents, conduct video consults, write, and share
prescription on mobile/web app
The app is also integrated with IOMT devices (Omron and Kardia) for real-time monitoring of
vitals. Other Covid-19 related initiatives include digitization of home isolation package workflows,
data capturing, among others. Digitization is also applied in other non-clinical areas, such as patient
and nurse feedback management, in-house kitchen processes and biometrics for employee
attendance management. Artificial Intelligence is being deployed in clinical areas especially
radiology to augment reporting and decision making. Max Healthcare’s AI solution for chest X-rays
is deployed in Max Saket and Max Smart. Similarly, Predible Lung IQ solution enables nodule
detection and fibrosis quantification for Covid-19 patients and hence helps radiologists assess
severity and disease progression. There are other solutions as well in the field of orthopaedics and
neurosciences that are currently helping doctors make informed clinical decisions.

Initiating coverage
Exhibit 76: 7x revenue growth in 4 years with scale-up of direct to customer services
Gross revenues
1,800
(Rs mn) 1,550
1,600
1,400
1,200
1,000
768
800 696
626
600
400 276
200 96
0
Exhibit 77: Video consultation trend over last 4-5 quarters
Video consultation
60,000 55,000
(Nos)
50,000
40,000
28,200 30,000 30,000
30,000
20,000
17,500
20,000
10,000
0
Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22
Going forward, Max Healthcare is working towards creating an integrated digital platform that
would help it deliver personalised and efficient healthcare services.
Exhibit 78: Digital initiatives across hospital companies

Companies Digital capabilities Comments
Apollo Hospital HealthCo - Apollo 24/7 Apollo HealthCo will be largest omni-channel across India.
Aster DM One Aster Integrated care delivery platform
Max healthcare Max@Home Digital platform as back-end service delivery platform
Fortis Healthcare my Fortis Integrated service across the business
Narayana ATHMA Unified platform

Initiating coverage
Financial performance and outlook

Exhibit 79: Strong sales growth visibility Exhibit 80: Steady expansion in EBITDA/ margin
Sales EBITDA EBITDA margin % (RHS)

70 66.1
20 26.5 27.0 (% ) 30
56.3 (Rs bn) 25.4
60 (Rs bn)
52.0 25
50 15
39.9 20
40 36.0
10 12.9 15
30
8.0
20 10
5
10 5
5 3 13 15 18
0 0 0
FY20 FY21 FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E
Source: Company, Axis Capital; FY21 includes sales of Radiant Life and 10 months Source: Company, Axis Capital; FY21 includes sales of Radiant Life and 10 months of
of Max Healthcare Max Healthcare. FY22-24E EBITDA includes non-operating expenses related to
ESOP, fair value contract assets and VRS scheme
Exhibit 81: Adjusted margin to remain strong Exhibit 82: EBIT margin improving
Adjusted EBITDA EBITDA margin % (RHS) EBIT EBIT margin % (RHS)
20 27.0 27.6 27.8 30 20 25

(% ) 21.0 21.8 22.3 (% )
(Rs bn) (Rs bn)
25 20
15 15
20
15.7 15
14.0
10 15 10
8.6
10
10
5 5
2.8 5
5
6 6 14 16 18 3 11 12 15
0 0 0 1 0
Source: Company, Axis Capital; FY21 includes sales of Radiant Life and 10 months Source: Company, Axis Capital; FY21 includes sales of Radiant Life and 10 months of
of Max Healthcare. FY22-24E EBITDA adjusted for non-operating expenses like Max Healthcare
ESOP, fair value contract assets and VRS scheme
Exhibit 83: EBITDA per bed improving with better operating metrics
EBITDA/ bed
6
(Rs mn) 5.1
5 4.7
4.4
4
2 1.7 1.7
0
FY20 FY21 FY22E FY23E FY24E
Source: Company; FY20 represents Max Healthcare + partnered healthcare facilities and demerged business of Radiant Life.
FY21 includes sales of Radiant Life + 10 months of Max Healthcare. FY22-24E EBITDA adjusted for non-operating expenses.

Initiating coverage
Exhibit 84: Hospital business to see steady growth Exhibit 85: Strong margin expansion led by…
Hospital sales Hospital EBITDA EBITDA margin % (RHS)

70 64 20
(Rs bn) 26.8 27.3 (% ) 30
(Rs bn) 25.4
60 55
25
48
50 15
39 20
40 35 15.8
14.1
10 15
30
20 10
5
10 5
6 6 12 15 17
0 0 0
Source: Company, Axis Capital; FY20 represents Max Healthcare including Source: Company, Axis Capital; FY20 represents Max Healthcare including partnered
partnered healthcare facilities and demerged business of Radiant Life. FY21 healthcare facilities and demerged business of Radiant Life. FY21 includes sales of
includes sales of Radiant Life and 10 months of Max Healthcare Radiant Life and 10 months of Max Healthcare. FY22-24E EBITDA adjusted for non-
operating expenses related to ESOP, fair value contract assets and VRS scheme
Exhibit 86: …growth in ARPOB and… Exhibit 87: …steady occupancy over next couple of years
ARPOB (Rs per day) Occupancy %

80,000 90
68,218 (%) 76 77 79
70,000 62,586 80 73
56,896 70 65
60,000 51,100 50,800
60
50,000
50
40,000
40
30,000
30
20,000 20
10,000 10
0 0
Exhibit 88: Strong growth visibility in Max Labs Exhibit 89: EBITDA and margin to see steady growth
Max Labs EBITDA EBITDA margin % (RHS)

3,000 500
(Rs mn)
(Rs mn) 18.0 (% ) 20
2,384 16.0
2,500
400
12.5 15
2,000
1,644
300 10.1
1,500 10
1,028
200
1,000 659
3.7 5
409 100
500
15 67 128 263 429
0 0 0

Initiating coverage
Valuations
Exhibit 90: Hospital peer valuation comparison
Mcap P/E (x) EV/EBITDA (x) ROE (%) RoCE (%)
(Rs bn) FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY19 FY20 FY21
India
KIMS IB Equity 107 35.6 30.1 28.4 21.9 18.0 16.6 27.0 na na na 19.2 25.4
APHS IB Equity 748 84.3 62.1 49.4 34.0 29.0 24.2 17.9 19.6 21.4 6.1 11.1 4.9
ASTERDM IB Equity 96 22.4 16.2 15.8 10.5 8.9 8.4 11.7 14.4 na 11.5 10.4 6.3
MAXHEALT IB Equity 387 48.9 41.9 34.2 29.0 26.9 22.6 16.3 18.5 19.1 na na na
FORH IB Equity 214 61.1 41.2 37.0 21.0 18.5 16.7 6.7 7.3 7.0 na 3.4 - 5.8
NARH IB Equity 117 40.0 31.4 27.4 19.8 16.3 14.5 22.7 23.2 22.9 6.1 9.9 na
India Industry Weighted Average 63.3 47.9 39.5 28.0 24.4 20.8 16.6 16.5 16.5 3.8 7.9 3.4
Asia Peers
IHH MK Equity 1,034 38.9 36.1 31.6 16.9 16.1 14.6 6.3 6.5 7.2 3.6 4.9 4.4
BDMS TB Equity 818 51.0 41.8 35.5 23.3 20.5 18.3 8.4 10.0 11.2 15.7 15.4 7.1
Asia Industry Weighted Average 44.3 38.6 33.3 19.7 18.1 16.2 7.2 8.0 9.0 8.9 9.6 5.6
Source: Bloomberg; as of 13 Dec 2021
Exhibit 91: Price performance

Absolute performance (%)
India Healthcare Price (Rs) 1 month 3 months 6 months 1 year 3 year 5 year
India Hospitals
Apollo 5,208 12% 10% 56% 121% 317% 321%
Aster DM 192 -8% -16% 18% 18% 28% NA
Fortis 283 10% 4% 21% 86% 100% 57%
Narayana 573 5% 9% 17% 48% 187% 69%
Max Health 400 16% 3% 56% 184% NA NA
BSE HC 25,100 0% -6% -1% 19% 83% 63%
Sensex 58,311 -4% 0% 22% 26% 62% 119%
Source: Bloomberg; Date as of 13 Dec 2021
Exhibit 92: SoTP valuation

Dec'23E
We value hospital business at 26x
SOTP valuation
EBITDA (Rs mn) Multiple (x) EV (Rs mn) Sep23E EV/ EBITDA given strong
Hospitals EBITDA 16,719 26 4,34,690 EBITDA growth visibility led by
Labs EBITDA 388 32 12,405
Total EBITDA 17,107 26 4,47,095 superior EBITDA margin vs peers.
Less: Net Debt* (Rs mn) (1,626) Max Lab valued at 32x given
Equity Value (Rs mn) 4,48,722
business in scale-up phase.
TP (Rs/ sh) 465
Source: Axis Capital, Net debt includes lease liabilities
Exhibit 93: 1 year forward EV/ EBITDA

fwd EV-E (x) Mean +1 SD -1 SD
30
(x)
25
20
15
Apr-21
Jun-21
Oct-21
Nov-21
Dec-21
Mar-21
Aug-21
Jul-21
Sep-21
May-21
Source: Bloomberg

Initiating coverage
Peer comparison
Exhibit 94: Apollo is largest player on bed capacity… Exhibit 95: …also operational beds
(Nos of FY21 FY21
beds)
10,000
12,000
10,206 7,409
8,000
10,000
8,000 6,000 5,787

6,750
6,000 4,000 3,250 3,133
4,250 2,686
3,708 3,400
4,000
2,000
2,000
0
0
Apollo Aster DM Max Fortis Narayana
Apollo Aster DM Max Fortis Narayana Hosp Health#
Hosp Health#
Exhibit 96: Apollo, Max and Fortis – metro focused Exhibit 97: Apollo Hospitals has superior margin
Ap ollo Aster Max Health
100%
84% Fortis Narayana
80% 72%
25%
61% (EBITDA
60% 54% 50% 54% margin %)
20%
40%
15%
18%
20%
10%
0%
Apollo
Manipal
Manipal
Fortis
Narayana
Max
Aster India
5%
0%
FY16 FY17 FY18 FY19 FY20 FY21
Exhibit 98: Apollo is among higher ARPOB hospitals Exhibit 99: Occupancy steady for Apollo Hospitals
Ap ollo Aster Max Fortis Narayana Ap ollo H osp Aster DM Max Health # Fortis
60 80% (%
ARPOB occupancy)
(000' Rs/ 75%
50 day)
40 70%
30 65%
20 60%
10 55%
0 50%
FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21

Initiating coverage
Exhibit 100: Gross margin steady Exhibit 101: Employee cost as % of sales – control on cost
(% gross FY20 FY21 H1FY22 Employee FY20 FY21 H1FY22
margin) cost as % of
100 sales)
40
7976 76 34
78 32 32
80 73 72 76 74 75 35
71 70 70
30 26
59 24
60 55 56 22 21
25 22 21
2021
20 17
40 1413
15
10
20 10
5
0 0
Apollo Aster DM Max Health Narayana Fortis Apollo Aster DM Max Health Narayana Fortis
Exhibit 102: Other costs declining trend – cost savings Exhibit 103: Doctor fees steady across leading players
(Other (Doctor fees
expenses as FY20 FY21 H1FY22 as % of sales) FY20 FY21 H1FY22
% of sales)
25% 24%
30 20% 21%
20% 20% 20% 20%
2525
25 23 20% 20% 18% 18%
21 21
1918 19 13%
20 17 17 17 18 18 15% 14%
15
15
11 10% 8% 7% 8%
10
5%
5
0 0%
Apollo Aster DM Max Health Narayana Fortis Apollo Aster DM Max Narayana Fortis
Health
Source: Company, Axis Capital Source: Company, Axis Capital, Assuming fees for Apollo at 20% of sales
Exhibit 104: Net debt declining across hospitals companies
(Net debt Rs bn) FY20 FY21 H1FY22
35
31
30 28
25
20
19 19
20
14
15 11 10
10 8 9
5 6 5
5 3 2
0

Initiating coverage
About the company

Exhibit 105: Max Healthcare: Key milestones and journey
Presence in metro cities with higher revenue concentration to sustain in near term
Exhibit 106: Presence in metro cities Exhibit 107: Key hubs from domestic in North and East
Source: Company Source: Company

Initiating coverage
Exhibit 108: Operating beds higher in Delhi & Mumbai… Exhibit 109: …metro regions are leading contributors
Haryana
71 % of operating beds % of H1FY22 gross sales
Uttarakhand
184
70% 65%
61%
60%
Punjab
333
50%
Maharashtra 40%
305
Delhi 30%
1,974
UP 20%
12%
11% 9%8% 10%
373 9%
10% 6%4%
2%3%
0%
DL UP MH PU UT HA
Source: Company, Axis Capital, as of H1FY22 Source: Company, Axis Capital, as a % of H1FY22 gross sales
Exhibit 110: Delhi, UP (NCR region) and Mumbai witnessed spike in sales
Combined Delhi NCR and Mumbai
(Rs mn) H1FY21 H1FY22 region has ~82% operating bed
16,000
20,000 share – metro focused; revenue-

wise contributes ~84% of gross
16,000 sales and has witnessed strong
9,660
recovery with ~60% YoY growth

12,000
in H1FY22.
8,000
2,680
2,150
2,070
1,610
1,310
1,290
4,000
970
840
690
480
0
DL UP MH PU UT HA

Initiating coverage
Exhibit 111: Max Healthcare – key management profile

Management Designation Comment
Mr. Abhay Soi is the Promoter of Max Healthcare. Prior to the demerger of healthcare business of
Radiant Life Care effective June 1, 2020, Mr. Soi was the Promoter, Chairman & Managing Director of
Chairman & Managing Radiant Life. Prior to Radiant Life, Mr. Soi co-founded a USD 350 mn Special Situations Private Equity
Mr. Abhay Soi
Director Fund, where he made investments across various sectors. He started his career as a restructuring
professional with Arthur Andersen where he led their financial restructuring business and
subsequently part of the restructuring practice of E&Y and KPMG.
Mr. Sanjay Omprakash Nayar was appointed on the Board of Max Healthcare on June 21, 2019. He is
the Chairman of KKR India. He joined KKR in 2009 and was Partner & CEO of KKR India until January
Mr. Sanjay Non-Executive Non
2021. Prior to joining KKR, he served as CEO of Citigroup's Indian and South Asian operations and was
Omprakash Nayar Independent Director
a member of Citigroup’s Management Committee and Asia Executive Operating Committee from 2002
– 2009. Mr. Nayar also served Citibank /Citigroup for 25 years in various positions in India, UK and USA.
Ms. Ananya Tripathi was appointed on the Board of Max Healthcare on June 19, 2020. She is a Director
with KKR Capstone India Operations Advisory. She leads the team’s value-creation efforts across KKR
Non-Executive Non India’s private equity portfolio companies cutting across industries including education, healthcare and
Ms. Ananya Tripathi
Independent Director industrials. Prior to joining KKR Capstone, she headed the category business at Myntra and was also
Chief Strategy Officer. She was previously an associate partner at McKinsey & Company and was with
the firm for seven years.
Joined the Company in Jan'12. He holds a bachelor’s degree in commerce from Panjab University and
Senior Director &
Mr. Yogesh Kumar is a member of the Institute of Chartered Accountants of India. He started his career with Ranbaxy and
Chief Financial
Sareen has around 32 years of experience. Before joining the Company, he was the chief financial officer at
Officer
Fortis Healthcare (Corporate Office – Gurugram).
Joined the Company in Jul'19. He has completed post graduate studies from Defence Services Staff
Senior Director & College, Wellington and holds a bachelor's degree in science from Jawaharlal Nehru University, New
Col. Harinder Singh Chief Operating Delhi and a master’s degree in science in defence and strategic studies from University of Madras. He
Chehal Officer- Cluster has completed a certificate course in business management from the IIM, Ahmedabad. With diverse
Two experience of over 37 years in various domains, he has over 12 years of experience in the healthcare
sector and was previously associated with Radiant Life as the COO and Fortis Hospitals Limited.
He is presently also the chairman for Internal Medicine at the Company. He joined the Company as a
consultant (internal medicine) in Jan'01. Holds a degree in bachelor of medicine and bachelor of surgery
Dr. Sandeep Group Medical
and degree of doctor of medicine from University of Delhi. He has earlier worked as a senior registrar
Buddhiraja Director
in department of medicine at Mumbarak Al-Kabeer Hospital, Ministry of Health, Kuwait and has over
29 years of experience.
Joined the Company in Oct'14. He holds a post-graduate degree of MBA from the Aligarh Muslim
Senior Director –
University, and a degree in BE from the Ravishankar University, Raipur. He has previously worked in
Mr. Anas Wajid Chief Sales and
HT Media Limited, Apollo Health and Lifestyle Limited, Artemis Medicare Services Limited and Fortis
Marketing Officer Healthcare Limited.
Joined the Company in Jul'19. He holds a bachelor’s degree in medicine and a bachelor’s degree in
surgery from University of Gorakhpur and MBA in health care administration from the University of
Senior Director –
Delhi. He was previously the director (operations and planning) at Radiant Life, responsible for BLK
Dr. Mradul Kaushik Operations &
Hospital and BNH Hospital. Before this, he was the medical superintendent at the Fortis Hospital,
Planning
Shalimar Bagh. He has worked, amongst others, with Global Health Private Limited, New Delhi and
Indraprastha Apollo Hospitals.

Initiating coverage
Max and Radiant merger – scheme, QIP, impact on financials
Max and Radiant merge scheme
Max Healthcare, on May 27,2020 received approval from National Company Law Tribunal
('NCLT') for the Composite Scheme of Amalgamation and Arrangement amongst Max Healthcare,
Radiant Life Care Private Limited, erstwhile Max India Limited and its subsidiary company
Advaita Allied Healthcare.
Consequently, Kayak Investments Holding and Mr. Abhay Soi, obtained control of the Company.
The business combination has been treated as a reverse acquisition for financial reporting
purposes, with Radiant Life Care as the accounting acquirer and Max Healthcare Institute as the
accounting acquiree/legal acquirer.
Exhibit 112: Details in respect of combination of Max hospital business merger

with Radiant Life
Particulars (Rs mn)
A. Consideration transferred
(i) Fair value of the Radiant Life care's previously held equity interest in the Company 19,631
(ii) Fair value of shares deemed to be issued on reverse acquisition 20,237
Total consideration (A) 39,868
B. Fair value of identifiable assets and liabilities recognised as a result of the Reverse
Acquisition
(i) Property, plant and equipment 12,613
(ii) Right-of-use assets 2,388
(iii) Capital work-in-progress 84
(iv) Intangible assets 22,342
(v) Intangible assets under development 1
(vi) Non-current investments 5
(vii) Trade receivables (non-current) 1,189
(viii) Loans (non-current) 3,350
(ix) Other bank balances (non-current) 8
(x) Non-current tax assets (net) 1,441
(xi) Deferred tax assets (net) 662
(xii) Other non-current assets 1,169
(xiii) Inventories 443
(xiv) Trade receivables (current) 3,502
(xv) Cash and cash equivalents 2,794
(xvi) Other bank balances 35
(xvii) Loans (current) 89
(xviii) Other financial assets (current) 72
(xix) Current tax assets 19
(xx) Other current assets 145
Total assets acquired (a) 52,351
Liabilities
(i) Long term borrowings 7,892
(ii) Lease liabilities (non-current) 1,752
(iii) Other financial liabilities (non-current) 9
(iv) Long term provisions 236
(v) Deferred tax liabilities (net) 6,043
(vi) Other non-current liabilities 2,319
(vii) Short term borrowings 4,750
(viii) Trade payables 3,031
(ix) Lease liabilities (current) 103
(x) Other financial liabilities (current) 6,357
(xi) Other current liabilities 173
(xii) Short term provisions 189
Total liabilities acquired (b) 32,854
Net Assets of MHIL and its subsidiaries recognised pursuant to the Scheme (a-b) 19,497
C. Goodwill (A-B) 20,371

Initiating coverage
QIP
During March 2021, the company issued 61.41 mn equity shares (face value of Rs 10 each) at a
price of Rs 195.40 per equity share, including a premium of Rs 185.40 per equity share (the Issue
price), aggregating to Rs 12 bn.
Exhibit 113: Impact of scheme and QIP on share capital

(Rs mn) FY19 FY20 FY21
Share capital 5,372 5,372 5,372
Less: Cancellation of shares upon business combination - - -5,340
Add: Issue of shares pursuant to the Scheme - - 9,013
Add: Issue of shares under QIP - - 614
Total 5,372 5,372 9,660
Exhibit 114: Security premium increased over FY19-21

(Rs mn) FY19 FY20 FY21
Securities premium
As of previous year 3,520 3,520 23,405
Premium on issue of fresh equity shares - 19,905 -
Pursuant to the Scheme - - 16,466
Premium on issue of equity shares under QIP - - 11,386
Less: Share issue expenses - -20 -208
Total 3,520 23,405 51,048
Exhibit 115: Asset addition post merger of Max and Radiant

Max Healthcare Radiant Max+Radiant
As per AR 2020 As per AR 2021
(Rs mn) FY19 FY20 FY19 FY20 FY21
Tangible assets
Gross Block 12,326 13,754 5,558 6,318 19,800
Pursuant to the Scheme - addition in gross block - - - - 12,613
Accumulated Depreciation 2,941 3,657 3,244 3,573 4,573
Net Block 15,268 17,411 8,802 9,891 24,373
CWIP 870 57 442 276 269
CWIP as % of GB 7% 0% 8% 4% 1%
Intangible assets
Gross Block 10,394 10,430 1,509 1,814 24,167
Accumulated Depreciation 709 914 320 388 832
Net Block 11,102 11,344 1,829 2,202 24,999
Right of use of assets
Gross Block - 1,530 208 213 2,478
Accumulated Depreciation - 199 199 51 224
Net Block - 1,728 406 264 2,702

Initiating coverage
Exhibit 116: Goodwill addition – recoverable value of cash generating unit

As per AR 2020 As per AR 2021
(Rs mn) FY19 FY20 FY20 FY21
Goodwill
Crosslay Remedies 2,050 2,050 - 2,084
Saket City Hospitals 659 659 - 3,719
Alps Hospital 145 145 - 522
Radiation Oncology services at Dr. B L Kapur Memorial Hospital - - 55 55
O & M Contracts of the accounting acquirer: - - - -
Dr. B.L. Kapur Memorial Hospital (Silo) - - 3,467 3,467
Dr. Balabhai Nanavati Hospital (Silo) - - 654 654
Hospital acquired upon business combination effective June 01, 2020: - - - -
Max Super Speciality Hospital, Saket (including related day care and other wings) - - - 4,832
Max Super Speciality Hospital, Shalimar Bagh - - - 2,073
Max Super Speciality Hospital, Dehradun - - - 1,873
Max Labs - - - 653
Max Super Speciality Hospital - Mohali - - - 4,362
Max Super Speciality Hospital - Bathinda - - - 252
Total 2,854 2,854 4,176 24,547
Exhibit 117: Post QIP, net debt reduced as of Sep’21

Reported Including PHFs
(Rs mn) FY20 FY21 H1FY22 FY20 FY21 H1FY22
Gross debt 8,336 8,971 8,234 19,270 11,280 10,020
Current maturity 216 233 - - - -
Put Option Liability 5,860 820 - 5,860 820 50
Total debt 14,412 10,024 8,234 25,130 12,100 10,070
Cash/Equivalents 1,220 6,553 7,289 4,110 6,660 7,480
Net Debt 13,191 3,470 944 21,020 5,440 2,590
Source: Company, Axis Capital, PHFs – Partnered Healthcare Facilities (trusts)
Exhibit 118: Improved EBITDA leading to better OCF and FCF generation
(Rs mn) FY20 FY21 H1FY21 H1FY22
PBT 128 -687 -2,780 3,715
Operating Profit before WC 1,222 4,361 794 5,209
(Inc.)/Dec in working capital -388 -3,763 333 -765

Cash flow from operations 834 598 1,126 4,444
Cash Taxes paid -63 580 693 -717

Net Cash from operating activities 771 1,179 1,819 3,727
Capex -901 -1,184 -693 -1,109
Free cash flow -130 -6 1,126 2,617


Initiating coverage
Financials as reported in annual report by Max Healthcare (Consolidated)

Exhibit 119: Profit and loss statement (Rs mn) Exhibit 120: Balance sheet (Rs mn)
Fiscal year end FY19 FY20 FY21 Fiscal year end FY19 FY20 FY21
Net sales 16,910 10,590 25,047 Paid-up capital 5,372 5,372 9,660
Other operating income 0 0 0 Reserves & surplus 4,260 20,159 46,727
Total operating income 16,910 10,590 25,047 Net worth 9,632 25,532 56,387
Cost of goods sold -3,645 -2,173 -5,944 Borrowing 16,199 8,532 10,781
Gross profit 13,266 8,417 19,103 Other non-current liabilities 3,550 2,492 10,558
Gross margin (%) 78 79 76 Total liabilities 33,656 39,737 85,444
Total operating expenses -11,714 -7,481 -15,064 Gross fixed assets 25,574 12,522 70,992
EBITDA 1,552 936 4,039 Less: Depreciation -3,650 -4,012 -5,628
EBITDA margin (%) 9 9 16 Net fixed assets 21,924 8,510 65,364
Depreciation -1,026 -456 -1,741 Add: Capital WIP 870 276 269
EBIT 525 479 2,298 Total fixed assets 22,794 8,785 65,633
Net interest -1,013 -832 -1,795 Total Investment 5 21,821 5
Other income 571 481 1,147 Inventory 260 268 538
Profit before tax 83 128 1,651 Debtors 4,994 961 4,853
Total taxation -149 -1 -459 Cash & bank 122 1,220 6,553
Tax rate (%) 179 1 28 Loans & advances 2,527 5,646 5,834
Profit after tax -66 129 1,192 Total current assets 9,478 8,477 18,243
Minorities 0 0 0 Current liabilities 4,275 3,181 7,718
Profit/ Loss associate co(s) -28 461 -231 Net current assets 5,203 5,295 10,525
Adjusted net profit -30 590 961 Other non-current assets 1,379 655 1,563
Adj. PAT margin (%) -0 6 4 Total assets 33,656 39,737 85,444
Net non-recurring items 0 0 -2,337 Source: Company
Reported net profit -30 590 -1,376
Source: Company
Exhibit 121: Cash flow statement (Rs mn)

Fiscal year end FY19 FY20 FY21
Profit before tax 83 128 1,651
Depreciation & Amortisation -1,026 -456 -1,741
Chg in working capital 1,171 834 598
CF from operations 890 771 1,179
Capital expenditure -1,157 -901 -1,184
CF from investing -165 -26,407 -730
Equity raised/ (repaid) 0 0 11,792
Debt raised/ (repaid) 222 5,736 -8,327
Dividend paid 0 0 0
CF from financing -740 23,531 1,913
Net chg in cash -15 -2,105 2,362
Source: Company
Notes:
 Healthcare undertaking of Radiant Life Care and residual business of erstwhile Max India Limited has
merged into Max Healthcare Institute through a NCLT approved Composite Scheme of Amalgamation
and Arrangement on June 1, 2020.
 Earlier, Radiant had acquired 49.7% stake of MHIL from Life Healthcare at ~ Rs 21.36 bn at Rs 80 per
share in June, 2019. Upon merger of the healthcare undertaking of Radiant with MHIL, the Radiant
shareholders were issued 635.04 mn shares by MHIL (merged entity) based on approved swap ratio
(9,074 shares of MHIL for 10 shares held in Radiant) and its pre-acquisition stake of 49.7% stood
cancelled. The merger resulted into Radiant promoters controlling the merged MHIL.
 Radiant was identified as the accounting acquirer and thus the merger qualified as a “reverse
acquisition”. MHIL financials were considered to be the continuation of Radiant’s healthcare
undertaking financials (accounting acquirer) and thus all assets & liabilities of MHIL were fair valued as
per principles laid down in IND AS 103. Demerged undertaking of Radiant was accounted for at its
carrying amounts. Applying the principles of Ind AS 103, the financial result of MHIL (merged) for year
ended March 31, 2021 consisted 12 months of operations of Radiant and 10 months of operations of
MHIL (merged). FY20 consisted 12 months of operation of Radiant and FY19 consisted of 12 months of
operation of Max Healthcare.

Initiating coverage
Financial summary including PHF (Consolidated)

Profit & Loss (Rs mn) Cash flow (Rs mn)
Y/E March FY20 FY21 FY22E FY23E FY24E Y/E March FY20 FY21 FY22E FY23E FY24E
Net sales 39,907 36,020 52,044 56,343 66,140 Profit before tax 1,258 (878) 9,732 11,190 13,742
Other operating income - - - - - Depreciation & Amortisation 2,067 2,150 2,469 2,854 3,335
Total operating income 39,907 36,020 52,044 56,343 66,140 Chg in working capital (7,982) 6,360 (3,604) (1,259) (364)
Cost of goods sold (8,957) (9,728) (13,011) (14,086) (16,535) Cash flow from operations (4,628) 7,109 6,749 10,659 14,102
Gross profit 30,950 26,292 39,033 42,257 49,605 Capital expenditure (5,859) (7,160) (4,666) (8,060) (8,290)
Gross margin (%) 77.6 73.0 75.0 75.0 75.0 Cash flow from investing (5,859) (7,160) (4,666) (8,060) (8,290)
Total operating expenses (25,784) (23,417) (25,829) (27,335) (31,771) Equity raised/ (repaid) 14,271 24,921 - - -
EBITDA 5,166 2,875 13,204 14,922 17,835 Debt raised/ (repaid) 4,788 (13,030) (2,270) (1,050) (1,000)
EBITDA margin (%) 12.9 8.0 25.4 26.5 27.0 Dividend paid - - - - -
Depreciation (2,067) (2,150) (2,469) (2,854) (3,335) Cash flow from financing 19,060 11,891 (2,270) (1,050) (1,000)
EBIT 3,099 725 10,735 12,068 14,499 Net chg in cash 8,573 11,840 (187) 1,549 4,812
Net interest (2,166) (1,883) (1,203) (1,097) (997)
Other income 325 280 200 220 240
Key ratios
Profit before tax 1,258 (878) 9,732 11,190 13,742
Y/E March FY20 FY21 FY22E FY23E FY24E
Total taxation (29) (523) (1,849) (2,126) (2,611)
OPERATIONAL
Tax rate (%) 2.3 (59.5) 19.0 19.0 19.0
FDEPS (Rs) 1.9 1.4 9.0 10.0 12.1
Profit after tax 1,287 (1,401) 7,883 9,064 11,131
CEPS (Rs) 3.7 0.8 10.7 12.3 15.0
Minorities - - - - -
DPS (Rs) - - - - -
Profit/ Loss associate co(s) - - - - -
Dividend payout ratio (%) - - - - -
Adjusted net profit 1,692 1,369 8,714 9,687 11,692
GROWTH
Adj. PAT margin (%) 4.2 3.8 16.7 17.2 17.7
Net sales (%) 10.9 (9.7) 44.5 8.3 17.4
Net non-recurring items (405) (2,770) (831) (623) (561)
EBITDA (%) 72.8 (44.4) 359.3 13.0 19.5
Reported net profit 1,287 (1,401) 7,883 9,064 11,131
Adj net profit (%) (1,638.6) (19.1) 536.7 11.2 20.7
FDEPS (%) (1,638.6) (24.3) 536.7 11.2 20.7
Balance Sheet (Rs mn) PERFORMANCE
Y/E March FY20 FY21 FY22E FY23E FY24E RoE (%) 6.5 3.0 14.2 13.9 14.6
Paid-up capital 9,045 9,660 9,660 9,660 9,660 RoCE (%) 7.0 1.5 14.8 15.2 16.4
Reserves & surplus 24,815 47,721 55,603 64,668 75,799 EFFICIENCY
Net worth 33,860 57,380 65,263 74,327 85,458 Asset turnover (x) 1.0 0.6 0.6 0.6 0.7
Borrowing 25,130 12,100 9,830 8,780 7,780 Sales/ total assets (x) 0.7 0.5 0.6 0.6 0.7
Other non-current liabilities - 1,580 1,790 1,790 1,790 Working capital/ sales (x) (0.1) 0.0 0.0 0.0 0.0
Total liabilities 58,990 71,060 76,883 84,897 95,028 Receivable days 24 48 38 43 42
Gross fixed assets 40,876 79,430 82,830 90,890 99,180 Inventory days 10 8 10 12 11
Less: Depreciation (6,064) (7,614) (10,084) (12,938) (16,273) Payable days 26 47 47 49 49
Net fixed assets 34,812 71,816 72,747 77,952 82,907 FINANCIAL STABILITY
Add: Capital WIP 1,578 234 1,500 1,500 1,500 Total debt/ equity (x) 1.0 0.3 0.2 0.1 0.1
Total fixed assets 36,390 72,050 74,247 79,452 84,407 Net debt/ equity (x) 0.0 0.1 0.1 0.0 (0.1)
Total Investment 21,380 20 20 20 20 Current ratio (x) 1.6 1.9 1.9 2.1 2.6
Inventory 940 740 1,086 1,336 1,510 Interest cover (x) 1.4 0.4 8.9 11.0 14.5
Debtors 2,605 4,691 5,429 6,681 7,550 VALUATION
Cash & bank 4,110 6,660 6,473 8,022 12,834 PE (x) 203.9 269.3 42.3 38.0 31.5
Loans & advances - - - - - EV/ EBITDA (x) 71.5 130.6 28.3 24.8 20.5
Current liabilities 4,890 6,260 6,951 7,537 8,523 EV/ Net sales (x) 9.3 10.4 7.2 6.6 5.5
Net current assets 2,765 5,831 6,036 8,503 13,371 PB (x) 10.2 6.4 5.6 5.0 4.3
Other non-current assets 1,545 6,841 3,420 3,078 2,770 Dividend yield (%) - - - - -
Total assets 58,990 71,060 76,883 84,897 95,028 Free cash flow yield (%) (2.8) 0.0 0.6 0.7 1.6
Note:
(1) PHF - Partnered Healthcare Facilities
(2) Gross block and debtors in balance sheet is as per Axis Capital estimates for FY20-24; Derived working capital cycle for FY20-24 base on Axis Capital
estimates for debtor days.

Initiating coverage
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Initiating coverage
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Ratings Expected absolute returns over 12 months
BUY More than 15%
ADD Between 5% to 15%
REDUCE Between 5% to -10 %
SELL More than -10%
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AxisCap - Max Healthcare - CR - 14 Dec 2021

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Max Healthcare Institute

Expansion visibility key differentiator; initiate with BUY

December 14, 2021 Pharmaceuticals | Initiating coverage

Financial summary (Consolidated)

Growth drivers ................................................................................................................................................ 5

Max Healthcare – strong positioning .................................................................................................... 7

Company structure and overview......................................................................................................... 11

Max Healthcare – Multiple drivers for growth................................................................................ 15

Peer comparison ........................................................................................................................................... 30

About the company ..................................................................................................................................... 32

Max and Radiant merger – scheme, QIP, impact on financials ................................................. 35

Financials as reported in annual report by Max Healthcare (Consolidated) ...................... 38

December 14, 2021 2

FY20 FY21 FY21

December 14, 2021 3

December 14, 2021 4

Exhibit 14: Doubling bed capacity over FY22-27

December 14, 2021 5

Looking to double its bed capacity over FY22-27

Narayana No major expansion plans in near term

Fortis Looking to expand overall bed capacity (Occupancy at ~60% in H1FY22)

Exhibit 17: Hospital peer valuation comparison

Exhibit 18: SoTP valuation

December 14, 2021 6

Max Healthcare – strong positioning

6,000 4,000 3,250 3,133

Source: Company, Axis Capital Source: Company, Axis Capital

Exhibit 21: Max: 2nd largest hospital by revenue in India

Source: Company, Axis Capital

December 14, 2021 7

Exhibit 24: …and higher ARPOB

FY20 FY21 H1FY22 FY20 FY21 H1FY22

(Rs/ Day) ARPOB (000' Rs/day)

December 14, 2021 8

Source: Companies, Axis Capital

FY20 FY21 H1FY22 (Rs per day) FY20 FY21 H1FY22

December 14, 2021 9

Exhibit 34: EBITDA margin improving for Max Healthcare

FY20 FY21 H1FY22 FY20 FY21 H1FY22

December 14, 2021 10

Company structure and overview

Exhibit 39: Max Healthcare hospital network

December 14, 2021 11

Focus on improving operating performance

December 14, 2021 12

Exhibit 42: Sales improving in last 2 years

50,000 131 160

Exhibit 43: EBITDA improvement over last 2-3 years

Performance improvement over FY19 to FY20 driven by:

Sharp recovery over FY21 and H1FY22 driven by:

December 14, 2021 13

Exhibit 44: Cost controls led by structural initiatives

Going ahead, we expect growth to be driven by

December 14, 2021 14

Max Healthcare – Multiple drivers for growth

1. Focus to improve case mix with increase in tower specialties

Exhibit 45: Share of tower specialty improving

20% 24% 20% 18% 17% 22%

Source: Company, Axis Capital

December 14, 2021 15

Exhibit 48: Specialty mix for Max Healthcare

2. Increase in occupancy across network for volume growth

Exhibit 49: Occupancy improving post impact of Covid in FY21