Apollo Hospitals embarks on mega capex drive, to commission six projects in FY26

Apollo Hospitals Q2 earnings topped estimates on key parameters of profit, revenue as well as profitability.

With its online pharmacy and diagnostics segments now largely stabilised, healthcare services major, Apollo Hospitals is all set to embark on a mega capital expenditure drive, aimed to expand its flagship hospitals business.

The company is set to commission six projects in the FY26, including hospital asset acquisitions, brownfield as well as greenfield expansions. These projects include hospital asset acquisitions for Apollo's Pune, Kolkata and Gurgaon hospitals, brownfield expansion in Delhi and Mysore and an asset-light greenfield expansion in Hyderabad.

Apollo Hospitals has earmarked a total balance project cost of Rs 1,700 crore for the six projects scheduled for commissioning in FY26. While all six projects are set to be commissioned next fiscal, some will be phased over a two-year period to manage costs and minimize EBITDA impact, the management stated during the post-earnings call. Of the total projected cost, Rs 1,300 crore is planned for expenditure in the next fiscal, with the remaining to be allocated the following year.

As for bed additions, these projects are slated to raise Apollo's bed count to 1,737, out of which around 1,400 will be operationalised in FY26 and the remaining in the year after, the management guided.

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Not stopping there, Apollo has a further line-up of mostly greenfield expansions through four new projects, slated to be commissioned in the next 3-4 years. The healthcare services major is set to undertake greenfield expansions in Chennai, Varanasi and Mumbai along with the brownfield expansion in Lucknow. The company has rolled out a capital outlay of Rs 4,400 crore for these four projects. Apart from that, this mega expansion will add another  3,512 beds for the company.

Apollo's flagship hospitals business delivered strong revenue growth of 14 percent on year to Rs 2,903.2 crore on a profit of Rs 364.3 crore, up 16 percent. Operating metrics were also solid with an EBITDA margin of 24.9 percent. This growth was driven by a sharp increase in occupancy rates, a higher Average Revenue Per Occupied Bed (ARPOB), greater in-patient volumes, and a favorable payor mix. Occupancy rose to 73 percent in Q2, up from 68 percent in the same period last year, while ARPOB climbed 3 percent to Rs 59,011, contributing further to the business' robust operational performance.

Meanwhile, the management of Apollo Hospitals also rolled out robust outlooks for its other business. While Apollo HealthCo, the company's the digital health and pharmacy vertical, which offers online consultations and operates the 'Apollo 24/7' platform turned profitable for the first this quarter, the management guided its Apollo Health & Lifestyle vertical--the one that houses its retail health business-- to turn profitable in the next 5-6 quarters.

Collectively, the management is target to achieve total revenue worth Rs 6,500 crore from these two verticals in the next three years. As of Q2, total revenue for the two verticals stood at Rs 2,686.1 crore.

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