HSBC has reaffirmed its 'buy' rating for Apollo Hospitals Enterprise Ltd., raising the target price by 17% to Rs 8,090 following the hospital's strong fourth-quarter results. Apollo Hospitals reported a 53.5% increase in net profit last Friday.
Apollo's revenue rose by 10% year-on-year, driven by a pick-up in volume and mix, according to the brokerage. It is also optimistic about the firm's plan to add a new 700-bed unit in Bengaluru. Another positive factor is Apollo's aim to achieve cost breakeven for its 24x7 platform by the third or fourth quarter of FY26, supported by improving scale.
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Apollo's Ebitda margin stood at 24.3%, up 117 basis points year-on-year, and remained steady quarter-on-quarter, aligning with Hubcap's expectations.
According to Apollo, there was a 1.2% impact on volume and a 50 basis points margin hit due to disrupted patient flow from Bangladesh. "Apollo expects low-to mid-teens revenue growth to continue for the existing HCS business helped by volumes and improving mix," the brokerage noted.
The hospital announced plans for a new 700-bed facility in Sarjapur, Bengaluru, with the first phase of 200 beds to be added in FY26. Steady Ebitda margins of around 23% are assumed for FY26-28.
"While it is making good progress to drive its GMV growth, we remain watchful on competition as some quick-commerce platforms are offering 10-15 minutes' delivery services for prescription medicines. Apollo offers a 19 minutes delivery service which it believes is a more calibrated and profitable business model (vs quick commerce models which chase growth by burning cash)," the brokerage noted.
Following the fourth quarter results, HSBC has adjusted its revenue and cost estimates to reflect a lower spend outlook for the 24x7 platform, partially offset by volume disruption from Bangladesh.
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