Connect with us

Hi, what are you looking for?

Share Market

Apollo Hospitals rating – Buy: A strong operational show by firm

Financial Express - Business News, Stock Market News

The 24x7 platform is better placed vs peers given wide service offering.The 24×7 platform is better placed vs peers given wide service offering.

APHS’ Q1FY22 results were ahead of our estimates, with sales/Ebitda/ adjusted profit 9%/16%/16% ahead. Sales and Ebitda were higher than our estimates across all segments owing to benefit from the COVID pandemic and vaccination drive across the country. Overall occupancy for hospitals improved q-o-q from 63% to 67%.

COVID-19 patients accounted for ~24-26% of healthcare services revenues. COVID-19 vaccinations accounted for Rs 1.9 bn of overall company revenues. AHLL also benefited from vaccination and reported its highest-ever Ebitda and Ebitda margins. Pharmacy back-end Ebitda margins (ex-Apollo 24/7 operating costs) improved 38bp q-o-q owing to strong top-line growth and an increase in private-label sales.

Apollo 24/7: Operating expenses increased q-o-q. Mgmt expects an annualised revenue run-rate of $50-60 mn from Apollo 24/7 by FY22-end. Currently, the company is doing 2,000-3,000 teleconsultation and ~30,000 pharmacy deliveries a day. Further, the company added over 4.7mn new users during the quarter.

Change in estimates: We raise FY22F EPS by 28% owing to benefit from the pandemic. Our estimate for FY23F EPS is increased slightly by 2%.

Valuation: We continue to like the narrative on APHS, as it presents a comprehensive play on India Healthcare. The hospital business has scope to grow organically and inorganically. The company has significantly expanded its retail presence and is the largest organised pharmacy chain in the country, and is also expanding its presence in diagnostics. Consistent improvement in Ebitda margin of pharmacy and AHLL is encouraging. We see the 24×7 digital platform as an enabler of growth for the company’s existing business segments. The narrative on digital healthcare has gained strong traction. The 24×7 platform is better placed vs peers given wide service offering.

Maintain Buy: Based on SOTP valuation of business segments, we see a fair value range of Rs 3,908-5,009. Our TP implies a multiple of 28.2x one-year forward EV/Ebitda vs 25x earlier. Our expectation of sustained growth narrative and benign market conditions lead us to set TP towards the higher end of the valuation range.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Technology

Cybercriminals Adopt the Blockchain to Broadcast confidential Messages A group of analysts from SophosLabs represents that programmers working the crypto-jacking malware, Glupteba, have been...

Technology

PUBG unban in India soon as PUBG Corp. Will The Government Of India Unban PUBG? PUBG Mobile was Ban in India, PUBG organization has...

Technology

A standard method to execute Bitcoin could be powerless against double-spending, the new examination has found. Blockchain sleuths at ZenGo, a wallet startup, have...

BlockChain News

HDD mining, also known as “storage mining”, is a process of obtaining cryptocurrency based on hard disk memory. Compared with traditional POW mining, hard...