KIMs Stock Jumps 6% While Narayana Hrudayalaya Drops 3% Following HSBC Coverage Initiation

Shares of Krishna Institute of Medical Sciences (KIMS) are set to take center stage on Friday, as the stock begins trading after a 1:5 stock split. Analysts have expressed optimism about KIMS, thanks to its robust long-term growth potential and solid operational track record.

At 10:20 am IST, KIMS shares were trading at ₹555, reflecting a 1.5% gain from the previous day's close. 

Brokerage firm HSBC has launched coverage on three hospital stocks, recommending a 'buy' for KIMS while assigning 'reduce' ratings to Global Health and Narayana Hrudayalaya.

KIMS's positive outlook helped push its stock up by around 6%, whereas Narayana Hrudayalaya saw a 3% dip on the NSE following a more cautious forecast. Global Health shares remained relatively stable with minimal movement.

HSBC’s confidence in KIMS is rooted in its operational success in key regions and its cost-efficient healthcare model. The brokerage firm projects a 26% compound annual growth rate (CAGR) in profits for KIMS between FY24 and FY27, fueled by an increase in hospital beds and patient volumes. Additionally, HSBC is keeping a close eye on the company’s new hospital openings in Mumbai, Nashik, and Bengaluru. The firm set a price target of ₹3,000 for KIMS, reflecting a potential 10% increase from current levels.

Conversely, HSBC forecasts a drop of 10% for Global Health and 27% for Narayana Hrudayalaya, with price targets of ₹990 and ₹1,000, respectively. For Global Health, concerns are focused on challenges in the Lucknow market, while Narayana Hrudayalaya is expected to face short-term margin pressures due to the costs associated with its new hospital in the Cayman Islands. HSBC also noted that any significant benefits from Narayana’s initiatives could take two to three years to materialize.

While the outlook for some hospital stocks remains mixed, HSBC highlighted Apollo Hospitals as its top 'buy' pick in the sector, raising its price target to ₹7,720, implying a potential 9% upside.

Earlier, on September 4, 2024, KIMS had announced September 13 as the record date for its 1:5 stock split. Following this announcement, its shares surged 3.5%, hitting a record high of ₹2,655.25 on the BSE.

Krishna Institute of Medical Sciences Ltd, based in Secunderabad, Telangana, is a healthcare group that provides an extensive array of medical services. These services include oncology, cardiac sciences, neurosciences, gastric sciences, orthopedics, renal sciences, organ transplantation, mother and child care, among many others.