Tulsian told CNBC-TV18, "Retail, healthcare, real estate they were all by and large high PE multiple industry. High PE multiple stocks enjoy carrying a PE multiple of about 40-50. Apollo Hospitals has definitely grown. They have good inorganic plans but now it seems that they are finding it a bit difficult to expand. Their present turnover is close to Rs 700 crore (Rs 7 billion), EPS is about Rs 13 plus. That translate PE multiple of about 30. If one really wants to give a PE multiple of 32 in an industry, can they really record a 30% growth. Are we looking for a Rs 1000 crore (Rs 10 billion) turnover in FY07 or FY08. With every inorganic growth one will be diluting the equity which is already about Rs 51 crore. (Rs 510 million)
He further added, "This healthcare segment is become very much crowded. With all these thing when one does not have a growth visibility, when one has the competition coming in, when one has the organic growth problem one need to go for an inorganic growth which leads to equity dilution. These entire thing brings down the PE multiple which otherwise was applied to the healthcare segment. I do not see much upside in Apollo Hospitals. I am not bullish that the price will cross Rs 500 in any event in the next 6-12 months. Either one can remain invested or switch to some other segment or industry.
