Buy Apollo Hospitals; target of Rs 19*0

Buy Apollo Hospitals; target of Rs 19*0

ICICI Direct’s research report on Apollo Hospitals :

Buy Apollo Hospitals; target of Rs 1970: ICICI Direct

The Q1 results saw the full impact of the COVID-related challenges. Despite a significant decline in hospital occupancies, the revenue drop was arrested by a significant increase in pharmacy revenue. During the epidemic, hospital revenue declined by 41.2% to Rs 795 crore, an increase of 15.6% to Rs 2172 crore. On the other hand, the pharmacy segment grew by 21.0% YOY to Rs 1279 crore. EBITDA margins fell to 1.6% and 13.8% in Q1FY20 due to negative operating leverage. Subsequently, EBITDA 90% YOY de-growth reached 35.5 crores. The loss for the quarter was Rs 208 crore and the Q1FY20 net profit was Rs 57 crore.

Outlook

We value stocks on a SOTP basis by valuing 13x FY22E EV / EBITDA, Healthcare (new hospitals) and Pharmacy business Healthcare Business (existing Hospitals & JV) at 1.5x and 2x FY22E EV / sales, respectively. Our target is 1970 rupees.

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The perspectives and investment tips are given in this section are the expert’s own and not that of the website or its management. We encourage clients to check with certified experts before taking any position in the stocks/shares mentioned.

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