Hospital Stocks Surge After CGHS Rate Revision, Boosting Sector Sentiment

Shares of leading hospital chains rallied sharply on Dalal Street following the Ministry of Health and Family Welfare’s announcement of revised rates for approximately 2,000 medical procedures under the Central Government Health Services (CGHS) scheme. This is the first major update in over 15 years and will come into effect from October 13.

The announcement triggered strong buying interest across the healthcare sector. On october 7,2025 10;25 am Fortis Healthcare shares rose over 7% and currently trading on discount at ₹1,040.60, Max Healthcare jumped over 6% and currently trading on discount at ₹1,132.70, while Yatharth Hospital, Krishna Institute of Medical Sciences (KIMS), and Aster DM Healthcare gained nearly 4% each aound same time today however curently trading at discount. Apollo Hospitals stock price also saw an increase of around 2% and currently trading at 7,679.00.

Revised Rates Expected to Boost Hospital Earnings

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The updated CGHS rates are anticipated to raise hospital charges by 5–30% for key procedures, particularly in cardiology, oncology, and orthopaedics. This adjustment could enhance profit margins and cash flows for hospitals treating CGHS beneficiaries.

Currently, the CGHS scheme covers around 4.6 million beneficiaries across 75 cities. With higher reimbursement rates, more hospitals may be motivated to join the scheme, potentially increasing patient inflow and contributing to revenue growth.

Major Beneficiaries of the Update

The greatest benefits will accrue to hospitals with a larger share of government-linked revenue. Max Healthcare receives almost 20% of its revenue from CGHS, while Yatharth Hospital receives the majority of its revenue from CGHS patients. Apollo Hospitals receives about 6% of total revenue, while Fortis and KIMS receive about 12% from CGHS patients. Participation was previously restricted by lower reimbursement rates; however, the new rates might promote increased participation and increase patient access to private healthcare facilities.

Market Outlook

Over the past six months, most hospital stocks have recorded significant gains ranging from 5% to 77%, compared with a 13% rise in the Nifty index. Currently, hospital stocks trade at reasonable valuations of 20–25 times Enterprise Value (EV) to EBITDA. Yatharth Hospital remains at the lower end, around 13 times EV to EBITDA, largely due to its higher exposure to government-linked revenue.

Conclusion

Hospital stocks have immediately increased as a result of the CGHS procedure rate revision, which is also anticipated to increase sector profitability. The policy modification is expected to encourage additional hospitals to join the CGHS network, expanding access to inexpensive healthcare for government beneficiaries, even though the short-term upside may be limited following the recent rally.