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Motilal Oswal Report
Apollo Hospital and Enterprise Ltd. delivered better-than-expected Q2 FY25 on account of improved occupancy and reduced operating costs at Healthco. The performance was partly impacted by reduced patient flow from Bangladesh due to ongoing political issues.
The higher medical mix compared to the surgical mix led to moderate YoY growth in average revenue per occupied bed for the quarter.
We raise our earnings estimate by 9%/3%/3% for FY25/FY26/FY27 to factor in:
reduced marketing cost driving better profitability in Healthco,
increased patient flow in the hospital business driving better operating leverage, and
additional business from insurance products/concierge services in Healthco.
We value Apollo Hospitals on an SOTP basis (34 times EV/Ebitda for hospital business, 15 times EV/Ebitda for retained pharmacy, 22x EV/Ebitda for front-end pharmacy, 15x EV/Ebitda for retained pharmacy, and 2x EV/sales for Apollo 24/7) to arrive at a target price of Rs 8,660.
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