Shares of hospital majors Apollo Hospitals Enterprise Ltd. and Max Healthcare Institute Ltd. declined on Friday following Macquarie's reiteration of 'Underperform' ratings on both stocks. The foreign brokerage expressed concerns about aggressive sector expansion and its potential impact on earnings.

Revised Price Targets and Ratings

Macquarie maintained its cautious stance while adjusting price targets for both hospital operators:

Max Healthcare's price target of ₹825 represents the lowest target on the Street and remains the only analyst projection below ₹1,000.

Underperformance Concerns

Both hospital stocks have struggled against broader market indices in 2025. According to Macquarie's analysis, Apollo Hospitals and Max Healthcare shares have underperformed the Nifty 50 by 14% year-to-date. The brokerage anticipates that further consensus earnings downgrades will continue to weigh on both stocks throughout 2026.

Sector Capacity Expansion Risks

Macquarie highlighted significant capacity expansion plans across the hospital sector as a key concern. The brokerage noted that eight listed hospital chains have provided guidance to add more than 6,000 beds by the end of FY27. This expansion represents the largest annual capacity addition witnessed in the hospital sector over the past eight years.

The aggressive expansion timeline raises concerns about potential EBITDA drag from new hospital operations. Macquarie emphasized that current consensus estimates do not adequately reflect the earnings impact from these new facilities, creating downside risks to projected financial performance.

Market Performance

On Friday's trading session, both stocks reflected the bearish sentiment:

The market reaction underscores investor concerns about the hospital sector's expansion strategy and its potential impact on near-term profitability. Macquarie's analysis suggests that the sector's ambitious growth plans may face execution challenges that could affect earnings visibility in the coming quarters.

Macquarie has updated its research coverage on Apollo Hospitals , maintaining its Underperform rating while revising the target price upward. The global brokerage firm has increased its target price to ₹6,230.00 from the earlier target of ₹5,700.00.

Rating and Target Price Revision

The brokerage's latest assessment shows a measured adjustment in its valuation approach for the healthcare services provider. While maintaining its cautious outlook through the Underperform rating, Macquarie has acknowledged improved fundamentals by raising the target price.

Investment Outlook

The Underperform rating suggests that Macquarie expects Apollo Hospitals to deliver returns below the broader market or sector average. However, the upward revision in target price indicates some positive developments in the company's fundamentals or operational metrics that warrant a higher valuation.

The 9.3% increase in target price reflects a modest improvement in the brokerage's assessment, though the maintained Underperform rating indicates continued caution regarding the stock's near-term performance prospects. This mixed signal suggests that while certain aspects of the business may be improving, overall market conditions or company-specific factors continue to weigh on the investment thesis.