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May 20, 2013, 04.52 PM IST | Source: CNBC-TV18

See higher growth; plan to add 950 beds in 18 mths: Apollo

Apollo Hospitals expects growth to pick up in the medium-term after sales fell due to extensive holidays during the quarter. Joint MD Suneeta Reddy adds that the healthcare major plans to add another 950 beds in next 18 months

Apollo Hospitals expects growth to pick up in the medium-term after sales fell due to extensive holidays during the quarter, says joint managing director Suneeta Reddy.

Also Read: Apollo Hospitals Q4 net up 27% at Rs 75.5cr on tax benefit

In an interview to CNBC-TV18, Suneeta Reddy adds that the pharmacy business grew at 28 percent and store-on-store growth was at 18 percent.

The healthcare major plans to add another 950 beds in next 18 months and Reddy expects EBITDA to grow from next quarter onwards. The growth in margins will depend on the ramp-ups at new hospitals.

Below is an edited transcript of the interview on CNBC-TV18

Q: Your revenue growth of around 15 percent this quarter is lower than the previous quarter. What led to the fall and what is the outlook for FY14?

A: This blip occurred in this quarter due to the extended holidays. In the medium-term, I expect to see growth picking up again. The whole-year growth has been at 19.7 percent as promised and more importantly, our profit-after-tax grew 38.7 percent.

Q: Can this performance be expected in FY14 as well— 20-percent growth in revenue and 40-percent growth in the bottomline?

A: I can’t give you any forward-looking estimate. All I can say is that we are one of the few companies that continue to grow at 20 percent and actually record growth at the bottomline as well. We are investing in infrastructure, growth and expansion. The will result in the addition of another 950 beds which will be this reflected in our quarterly performance.

Q: How have your healthcare and pharmacy businesses performed?

A: The pharmacy business has grown at a rate of 28 percent. Our SAP (standalone pharmacies) division were the most affected by the holidays. There was a slight delay in the rollout of new pharmacies due to problems with licences.

But these new pharmacies would be rolled out across April and May. And they will be on track to deliver the growth that we promised. Store-on-store growth has been at 18 percent and a positive EBITDA has maintained which will continue to contribute to overall EBITDA growth.

Q: Does this rule out any sort of plans of spinning off your retail pharmacy business?

A: No, It is not ruled out at all. When we will get most recognition for the value realisation we will look at a new structure that will benefit Apollo Hospitals Enterprise (AHEL), the pharmacy division, the healthcare services and the pharmacy divisions.

Q: The company has managed to improve its margins over the last few quarters. What is the outlook on the margin front for FY14?

A: I am confident that EBITDA will grow. Margins will depend on the ramp-up of the new hospital beds because that will involve the incurring of some costs. However, there will be better utilisation of tertiary care facilities where the margins have expanded. If you look at the topline, volumes grew by 9 percent, but our case-mix and price realisation was 7 percent. So, that will continue to strengthen our margins.

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