Jefferies Recommends Six Healthcare Stocks with Up to 46% Upside

Shares of several prominent hospital chains, including Fortis Healthcare, Dr Agarwal’s Healthcare, Manipal Health Enterprises, Apollo Hospitals, and Medanta, have faced downward pressure for two consecutive sessions. The declines followed a sharp drop of up to 10% in the previous trading day. This slump came after the Supreme Court raised concerns about high markups on cancer medications and urged the government to investigate claims that certain hospitals compel patients to buy medicines exclusively from their own or affiliated pharmacies.

Despite this regulatory scrutiny and the resulting market reaction, investment banking firm Jefferies views the current stock prices as an attractive buying opportunity. The firm has issued 'Buy' ratings on six healthcare companies, anticipating significant upside potential over the coming years.

Jefferies assigned a target price of Rs 10,350 for Apollo Hospitals, representing an expected increase of 27% from current levels. The firm projects the company's EBITDA to grow at a compound annual growth rate (CAGR) of 20% between the fiscal years 2026 and 2029. Apollo Hospitals is one of India's largest healthcare providers with a diverse network of hospitals and healthcare services, making it a key player in the sector.

Similarly, Dr Agarwal’s Healthcare received a Buy rating with a target price of Rs 600, suggesting a 25% upside. Jefferies forecasts the company’s EBITDA to expand at a 23% CAGR during FY26 to FY29. Dr Agarwal’s operates a chain of eye care hospitals and clinics, specializing in ophthalmology services across India.

Fortis Healthcare is another focus for Jefferies, which set a target price of Rs 1,125, implying the highest upside among the six stocks at 46%. The firm expects Fortis’s EBITDA to grow at 17% annually over the next three years. Fortis is known for its multi-specialty hospitals spread across various Indian cities.

Max Healthcare was also given a Buy rating with a target price of Rs 1,260, indicating a potential 36% gain. Its EBITDA is forecasted to grow at 18% CAGR from FY26 to FY29. Max Healthcare operates a network of hospitals offering specialized medical services, including cancer care and cardiology.

For Manipal Health Enterprises, Jefferies set a target price of Rs 870, reflecting a 23% upside. The expected EBITDA CAGR for this period is 19%. Manipal Health runs a chain of hospitals and healthcare facilities focused on comprehensive patient care.

Lastly, Medanta received a Buy rating with a target price of Rs 1,660, suggesting a 22% increase. The firm estimates an EBITDA CAGR of 22% between FY26 and FY29. Medanta is recognized for its tertiary care hospital services and multidisciplinary treatment options.

The healthcare sector in India has been growing steadily, driven by increasing demand for quality medical services and rising healthcare awareness. However, regulatory interventions such as those from the Supreme Court highlight ongoing challenges related to pricing and supply of medicines. Investors looking at long-term potential might find current valuations appealing, especially with projections of robust earnings growth across leading hospital chains.

It is important for investors to consider these recommendations alongside their own research and risk tolerance. The views expressed by Jefferies represent one perspective in a complex market environment influenced by regulatory, economic, and operational factors.

Disclaimer: This article was authored by Veer Sharma, who is not a SEBI-registered Research Analyst or Investment Adviser. Veer Sharma and his relatives do not hold financial interests in any of the companies mentioned as of the date of publication. The investment opinions quoted are those of the respective SEBI-registered analysts or brokerage firms and have been reproduced with attribution. Readers should consult original research reports before making investment decisions. The Economic Times Digital and the journalist are not responsible for any investment outcomes.