Apollo Hospital a good defensive bet: SP Tulsian

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Apollo Hospital a good defensive bet: SP Tulsian

Apollo Hospital a good defensive bet, says SP Tulsian, sptulsian.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Apollo Hospital See messages about Apollo Hospital

Apollo Hospital a good defensive bet, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "If you see for last 10 days performance I think Apollo Hospital has given extreme volatility on both the sides. Moved as close as to Rs 700 and that fell to as low as Rs 450 inspite of this stock generally has been ruling in a very stable manner. In fact if you see the performance barring these last 10 days this has not really shown a very wild kind of swings or something like that. So the reason for choosing this stock is that this is one of the largest healthcare companies in Asia. They have close to about 55 hospitals with the total bed capacity of 8500 beds."

He further added, "The best valuations which now-a-days are given is either to the pharma companies or to the healthcare companies. From India there are two companies fighting for this space, one is Apollo Hospitals, second is Fortis Healthcare. In fact in Fortis Healthcare there are so many corporate governance issues, the recent development have not been very comforting and that stock has been correcting. So obviously the institutional investors and all that have been taking a shift to this stock. If you go by their shareholding pattern, promoters are holding close to about 32% and 58% of the stake is held largely by the FIIs and the foreign corporate bodies. Collectively both put together, 90% of the stake is held by the overseas institutional investors plus the promoter with a very low float of about 10%."

"If you come on the financial performance, this is a consistent performer. If I just first take a call on the first half of the H1, they have a topline of close to about Rs 1300 crore with EPS having reported of about Rs 8 plus for the shares. So the consistent growth of 15% is being posted by the company. There are lot of rumors and speculations that probably the promoters, the Reddy's may look to exit this company and there are again those overseas institutional buyers who are prepared to give a very good valuation. But apart from all those news and all that one has to take a call which can be seen as a defensive mediocre growth oriented stock and probably I think Apollo Hospital falls in that category. If you see EPS of Rs 16-17 for this year, the equity base is not very high at about Rs 65 crore."

"So taking all this into consideration I think that stock has the capability to move about Rs 600 in next six months because the rational in this market is that at least first look to preserve your capital which is not seen in case of many frontline stocks as well. So, one can expect a price of Rs 600 and any corporate announcement news which can be seen maybe in the next three months or four-six months. If you get any kind of bump in the share price moving beyond Rs 600-650, one can easily exit and look to re enter the stock at the lower levels. So this seems to be a good defensive quality stock which one can have in his portfolio."