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    MAXHEALTH.NS · NSI · Healthcare

    Max Healthcare Institute Limited

    Also onConsensus Drift

    Implied value per share

    INR 306.03

    Market price

    INR 1049.30

    Implied upside

    -70.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 13.5% of revenue against depreciation of 5.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 45.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    INR 306.03-70.8%
    Exit multiple
    INR 866.27-17.4%
    Market price
    INR 1049.30

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn7bn14bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 100.7bnINR 123.2bnINR 150.7bnINR 184.4bnINR 225.7bn+22.4%
    EBITINR 23.4bnINR 28.7bnINR 35.1bnINR 42.9bnINR 52.5bn+22.4%
    NOPATINR 18.2bnINR 22.2bnINR 27.2bnINR 33.3bnINR 40.7bn+22.4%
    Add depreciation & amortisationINR 5.1bnINR 6.3bnINR 7.7bnINR 9.4bnINR 11.5bn+22.4%
    Less capital expenditureINR -13.6bnINR -16.6bnINR -20.3bnINR -24.9bnINR -30.5bn+22.4%
    Less increase in working capitalINR -3.6bnINR -4.4bnINR -5.3bnINR -6.5bnINR -8.0bn+22.4%
    Free cashflow to firmINR 6.1bnINR 7.5bnINR 9.2bnINR 11.2bnINR 13.7bn+22.4%
    Discount factor0.95390.86810.79000.71890.6542-
    Present valueINR 5.8bnINR 6.5bnINR 7.3bnINR 8.1bnINR 9.0bn+11.4%
    Present Value Of The ForecastINR 36.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.406Reported 0.113, pulled toward 1.0 (Blume)
    Cost of equity10.05%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 1021.3bn96.7% of capital
    Total debtINR 34.8bn3.3% of capital, book value as a proxy
    Tax rate22.5%Effective, capped at statutory
    WACC9.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 306.03

    89% of EV

    Forecast FCFF, final year
    INR 13.7bn
    Capex at depreciation, working capital in reinvestment
    INR 42.2bn
    Less reinvestment at g/ROIC (24.2% of NOPAT)
    INR -10.2bn
    Capitalised
    INR 32.0bn
    ROIC (reported)
    10.4%
    Terminal value, undiscounted
    INR 444.1bn
    Terminal value, discounted
    INR 290.5bn
    Enterprise value
    INR 327.2bn
    Less net debt
    INR 28.1bn
    Equity value
    INR 299.1bn

    Exit at 20.0x EBITDA

    Value per shareINR 866.27

    96% of EV

    Terminal value, undiscounted
    INR 1281.1bn
    Terminal value, discounted
    INR 838.1bn
    Enterprise value
    INR 874.8bn
    Less net debt
    INR 28.1bn
    Equity value
    INR 846.7bn

    Spread between methods: 96%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.89%427.56439.51453.41469.84489.69
    8.89%355.50361.37367.94375.38383.95
    9.89%301.06303.47306.03308.76311.70
    10.89%260.68261.92263.17264.42265.66
    11.89%229.37230.47231.56232.66233.75

    Outlined: this model. Green text: above today's price of 1049.30. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year22.4%57.2%+34.8pp
    EBIT margin23.3%66.8%+43.5pp
    Discount rate9.9%5.1%-4.8pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.