Apollo Hospitals Q1 Preview: Losses from Apollo HealthCo to drag earnings

Investors will await clarification on the news of Apollo Hospital planning to dilute some stake in Apollo HealthCo.

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Apollo Hospitals Enterprises is all set to release its April-June quarter results on August 11. While the Street is anticipating a recovery in earnings sequentially, elevated spends on the company's Apollo HealthCo business is expected to drag numbers on a year-on-year basis.

Even though the management had guided for a breakeven coming in the way for Apollo HealthCo in FY24, it is unlikely to be seen till the fag end of the current fiscal. Hence, brokerages foresee a decline in net profit for the hospital major for the quarter under review.

"Even though overall growth for Apollo Hospitals may be dragged lower by losses in HealthCo but sequentially, the division should post lower losses," brokerage firm Jefferies stated in its report. The company had also planned to curtail investments for its Apollo HealthCo business, in a bid to ease pressure on overall margins.

Painting a similar picture, a poll of brokerages collated by Moneycontrol pegged the hospital major's consolidated net profit for the period at Rs 177.6 crore, down nearly 44 percent from the Rs 317.11 crore clocked in the same quarter of the preceding fiscal.

As for revenue, brokerages estimated it to come around Rs 4,435.10 crore, reflecting a near 17 percent rise from the base quarter's Rs 3,795.60 crore.

Among the brokerages polled by Moneycontrol, Prabhudas Lilladher had the lowest growth projections for Apollo Hospitals while ICICI Securities had predicted the highest growth.

Investors will also remain focused on the company's bed occupancy rate, which is expected to grow sequentially. The company, in its previous earnings call had announced its plans to take bed occupancy levels for its core hospital business to 70 percent by the end of FY24. The bed occupancy level in the previous quarter was at 64 percent.

Along with that, Average Revenue Per Occupied Bed (ARPOB) is also expected to rise on quarter, thanks to a better payer and specialty mix.

Meanwhile, Prabhudas Lilladher believes commentary on the Apollo 24x7's losses and outlook for the hospital segment's occupancy will remain key monitorables for the company.

Investors would also look for any clarification from the management on the news of the company planning to divest 5-6 percent stake in Apollo HealthCo for raising $2.5-$3 billion.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.