Apollo Hospitals Eyes Bets On Expansion To Drive 20% Revenue Growth In Three Years

Apollo Hospitals Enterprise Ltd. expects to clock a revenue growth of around 20% in the next three years, driven by its expansion plan, according to the company's Managing Director Sunita Reddy.

Apollo Hospitals reported a healthy financial performance in Q3 of the current fiscal with its net profit surging over 52% year-on-year to Rs 372.3 crore against Rs 245.3 crore in the year-ago period.

The company's revenue jumped 14% year-on-year to Rs 5,526.9 crore versus Rs 4,850.6 crore in the corresponding quarter a year ago. Ebitda surged 24% year-on-year to Rs 761.5 crore. Ebitda margin expanded 110 basis points to 13.8% in the December quarter from 12.7% in the corresponding quarter of the previous financial year.

"Currently, we are averaging 15% and will continue to grow at this rate. When we add the new capacity, it will move to 20%. By FY26-27, we will start to move to the targeted 20%," Reddy said.

Shedding light on the company's expansion plans, the top executive explained that Apollo Hospitals is working on a combination of both greenfield and brownfield initiatives.

The company is already working on up to four Brownfield expansion initiatives which will start showing results on its capacity by the first quarter of next fiscal year.

"If you look at what we are currently doing, expansion in Kolkata is brownfield— existing hospital being modified to suit Apollo and National Accreditation Board for Hospitals and Healthcare Providers standard. In Hyderabad, again it’s brownfield – an existing hospital is being modified to suit our accreditation standards. Going forward, you will see more brownfield," she said.

 "At least three-to-four brownfield projects. Pune also is a brownfield project, where we have acquired an existing hospital with a 250-bed capacity. All of these (brownfield projects) will open in the first quarter of next year," Reddy added.

The company’s subsidiary Apollo Health and Lifestyle Ltd. incurred a net loss of Rs 8 crore despite a sharp 15% uptick in its revenue at Rs 389 crore from Rs 337.7 crore in the year-ago quarter. Ebitda grew 32% YoY to Rs 34.2 crore with a margin of 8.8%.

Commenting on the growth prospects of the company, Sunita Reddy said that she expected the margins to climb up to 15%.

Apollo Health and Lifestyle Ltd.'s margins were impacted due to a muted season and a higher concentration of referral business during the period under review, according to Reddy.

She projected the margins to improve with the expansion of its speciality testing menu.

"The revenue was strong at Rs 121 crore and now with the speciality testing menu, you will see greater margin and higher revenue. They will launch a global reference lab next week and they will become reference lab for rare diseases, and everything related to oncology," she said.

Shares of Apollo Hospitals Enterprise were trading 2.05% higher at 6,447.05 as of 1:00 P.M. In comparison, the benchmark Nifty 50 was 0.04% lower at 23,061.5 points.