Max Healthcare posted a stable performance in Q1FY27, with revenue/EBITDA/PAT rising by 15/15/4% y/y. Consolidated revenue grew 15% y/y to Rs28.3bn (ex-Onco up 20% y/y), while Max Labs/Max@Home revenue came in at Rs580/780m (up 20/32% y/y). Overall occupancy remained flat y/y at 75%, while ARPOB rose 5% y/y to Rs81,900. Other highlights: (a) The board of directors approved foray into medical education and set-up of medical colleges, in view of proposed regulatory changes by National Medical Commission; (b) approved Rs4.25bn capex for brownfield tower at MSSH, Vaishali (to add 202 beds to the existing 387 beds); and (c) The company acquired all outstanding shares of Yerawada Properties Pvt. Ltd. (YPPL) representing ~50.22% of economic interest. We maintain BUY rating on the stock with an unchanged TP of Rs1,220, valuing its hospital/laboratory business at 32/26x FY28e EV/EBITDA.

Operating Performance: Consolidated EBITDA grew 15% y/y to Rs.7.1bn, while revenue rose 15% y/y to Rs28.4bn, mainly led by 10% y/y rise in OBDs. EBITDA margin stood at 24.9% (flat on y/y basis), due to recent commissioning of new brownfield capacity and KHL acquisition.  The share of oncology in IPD revenue dropped to 22% from 26% in Q1FY26, owing to discontinuation of select chemotherapy drugs for institutional patients. Overall RoCE (ex-CWIP) stood at 29.2% in Q1FY27.

Brownfield and Greenfield Expansion to Drive Growth: The company acquired 58.28% stake in Kalinga Hospital (250-beds) on 18th of May-26 for ~Rs2.98bn. On 30th of Jun-26, it acquired 100% voting rights (~50.22% economic interest) in YPPL, with preliminary municipal approval received for a proposed 450-bed Pune hospital. At Max Smart, 202 beds are operational with the remaining 198 beds are likely to commission in Q2FY27. The board of directors has approved Rs4.25bn for a 202-bed brownfield tower at MSSH, Vaishali (over 387 existing), which is likely to be commissioned in Q4FY30.

Foraying into Medical Education: National Medical Commission now allows for-profit hospitals to open medical colleges. The management expects an RoCE of >25% from this venture with initial plan is to start a college at the 27-acre Lucknow campus with ~Rs3bn capex to set up a 150-seat medical college.

Outlook and Valuation: Despite pressure on oncology business, the company delivered strong results in Q1FY27. Looking ahead, we expect growth prospects to remain intact, led by: (a) ramping up of Max Smart, Max Vaishali; (b) brownfield additions; and (c) ~2,000+ beds expansion plans for long-term. We maintain our EBITDA estimate for FY27/28e. Expecting revenue and EBITDA to clock 18% CAGR each over FY26-28e, we maintain BUY rating on the stock with an unchanged TP of Rs1,220, valuing its hospital/laboratory business at 32/26x FY28e EV/EBITDA. Key Risks: (a) Delay in project execution leading to slower rate of bed addition; (b) regulatory risks; and (c) lower international business.