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Website |
The Economic Times - Mumbai |
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Date |
2 March 2024 |
SHARES SLIP 2-7% Rich valuations enjoyed by these cos may
come under pressure with rise in volatility, say market participants
Mumbai: Shares of hospital cha ins and healthcare providers
extended losses on Friday as a likely standardization of charges for public and
private hospitals is seen hurting the profits of
private players, given their higher rates compared to go- vernment-owned
peers.
Shares of these companies ended 2-7% lower even as the
broader market ended stronger, with the Nifty 50 and Sensex ending nearly 2%
higher each.
The Supreme Court, while hearing a public interest
litigation, has directed the central government to notify standard hospital rates
within six weeks, failing which it will implement Central Government Health
Scheme (CGHS) rates as an interim measure. These CGHS rates are significantly
lower than the average rates charged by public players.
“We note that CGHS rates are ~40-50% lower than normal
rates, and not all states have implemented the Clinical Establishment Act,”
Nuvama Institutional Equities said in a note.
Experts see the rich valuations enjoyed by this sector coming under pressure and stocks remaining volatile, even as they see little scope for standardisation given the practical challenges for implementation and as
the overall ecosystem being skewed towards private players.
‘While the Clinical Establishment Act states that the rates
charged by clinical establishments should be within a range determined by the
central government in consultation with the state governments, several states
such as Maharashtra, Punjab, West Bengal and the Union Territory of Delhi have
not implemented this.
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