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.
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.