The healthcare industry has been buzzing with excitement after the CGHS rate revision. Nuvama Institutional Equities called it a “welcome development for the sector,” a fiscal catalyst that lands right when private hospitals are in the middle of a massive bed expansion cycle and facing disputes with insurers over reimbursements.
Nuvama on Healthcare sector: A fiscal boost arriving just in time
Nuvama noted that median price hikes across procedures are around 100%, while some, especially heart transplants and complex neurosurgeries, have seen revisions as high as 3–6 times the earlier rate.
For instance, the CGHS rate for a heart transplant has increased from Rs 3.17 lakh to Rs 15 lakh, and a cervical laminectomy from Rs 26,450 to Rs 53,000. These jumps, Nuvama says, will materially improve the revenue mix for large multi-specialty hospitals with significant government business.
Top Hospital stocks recommendation by Nuvama
Nuvama identifies Max Healthcare, Fortis Healthcare, Narayana Health, and Yatharth Hospitals as the top beneficiaries. The reason being their large exposure to CGHS and other government-linked patient volumes.
Nuvama on Max Healthcare: ‘Buy’
Nuvama estimates a 5–8% revenue boost and 350–400 bps margin expansion for Max Healthcare from the CGHS repricing alone. The firm notes that 10% of Max’s revenue comes from CGHS-linked business and about 20% from government patients overall.
The brokerage retained a Buy with a target price of Rs 1,430, up from Rs 1,069, implying a 34% upside. It expects FY25–27 EBITDA CAGR at 24.9%, projecting EBITDA to rise from Rs 23,190 crore to Rs 35,606 crore by FY27.
Nuvama on Fortis Healthcare: ‘Buy’
Nuvama projected a 5% revenue lift and 300–350 bps EBITDA margin gain for Fortis. The hospital chain’s 21% government business exposure and large Tier-I footprint make it one of the key winners.
A Buy rating is maintained with a target of Rs 1,020 versus Rs 980 currently, implying modest near-term upside but stronger structural positioning.
Nuvama on Narayana Health: ‘Buy’
For Narayana Health, Nuvama estimates a 4% revenue and 250–300 bps EBITDA uplift from CGHS revisions, driven by its high 19–20% government mix and solid Tier-I presence (62% of beds).
It maintained a Buy stance, calling Narayana “a value play with expanding fiscal leverage and long-term compounding potential.”
Nuvama on Yatharth Hospitals: ‘Buy’
Yatharth’s 12% CGHS exposure and 84% presence in Tier-II cities position it for a 4% revenue gain and 14% EBITDA uplift, according to Nuvama.
It remains a Buy, citing structural demand in Noida and Greater Noida clusters and rising ARPOBs.
Nuvama on Apollo Hospitals: ‘Buy’
Though Apollo’s CGHS exposure is lower at 5–6%, the firm noted that rate hikes for key procedures such as cardiac and neuro will deliver a 3% revenue and 200–250 bps margin improvement.
Nuvama sets a target of Rs 9,010 versus the current Rs 7,450, with a 34% potential upside.
Sector-wide implications
The CGHS revision, Nuvama argued, does more than raise hospital rates it sets a new benchmark for other public healthcare schemes such as the Ex-Servicemen Contributory Health Scheme (ECHS), which may follow suit.
Risks and caveats
Nuvama cautions that some procedures in Tier-III cities may see small price cuts, and implementation delays could postpone full benefits. The government is acknowledging cost inflation in healthcare. For investors, this repricing changes the arithmetic. Hospitals with large government exposure, once seen as margin laggards, could now emerge as outperformers, the report added.