'Buy' Apollo Hospitals Maintains HDFC Securities, On Steady Outlook, Improved Return Ratio Visibility

While Apollo Hospitals has increased its operating bed capacity by just 700 beds, a 10% increase over FY19-24 (versus 25% over FY14-19), its sales/Ebitda saw a 14/21% CAGR over FY19-24, driven by an 11% CAGR in average revenue per occupied bed and post-Covid occupancy improvement. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .HDFC Securities Institutional Equities.Apollo Hospitals Enterprise Ltd. has consistently delivered steady performance over the last several quarters, driven by:steady growth in its hospital business (52% of sales) with margin improvement,strong growth in HealthCo (41%) with a sharp improvement in margin due to a reduction in Apollo 24/7 spending, andexpansion-led growth in Apollo Health and Lifestyle Ltd. (7%). Going forward, we expect: the hospitals to experience steady growth driven by a combination of occupancy improvement and mid-single-digit growth in average revenue per occupied bed from an improving case/payor mix; the phase-wise bed addition of 1,700+ over FY25-27 will provide growth visibility while limiting the drag on margins.HealthCo to see strong scale-up driven by steady growth in offline and the expansion of the Apollo 24/7 business, with continuous cost reductions to improve margins.Apollo Health and Lifestyle to see strong growth from network expansion, and the company expects 100-150 bps margin expansion over the next few years. Given steady sales growth, margin expansion, and improved return ratio visibility, we maintain a Buy rating. We have rolled forward our target price to Rs 7,520, based on a 25x blended FY27E enterprise value/Ebitda, assigning:EV/E of 25x to the hospital business,EV/E of 17x to the offline pharmacy, and EV/E of 21x to Apollo Health and Lifestyle..Click on the attachment to read the full report:.'Buy' DCB Bank Shares Says Motilal Oswal On Attractive Valuations, Sees 47% Upside .DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

'Buy' Apollo Hospitals Maintains HDFC Securities, On Steady Outlook, Improved Return Ratio Visibility

Given steady sales growth, margin expansion, and improved return ratio visibility, HDFC Securities maintains a Buy rating on Apollo Hospitals.

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