In an interview to CNBC-TV18, Suneeta Reddy, joint managing director of Apollo Hospitals spoke about the company’s second quarter performance and road ahead.
Below is verbatim transcript of the interview on CNBC-TV18
Q: Your margins have slipped this time to about 16.5 percent versus 17.2 percent year on year. Can you just take us through this quarter’s performance and whether you faced any pressures on the operational front?
A: It is important to note that healthcare services which is hospital business, the margin actually expanded and it grew to 24.6 percent from 24.3 percent. So the healthcare business is very secure. Our stand alone pharmacies (SAP) revenues grew but their margins also improved from 2.9 to 3.3 percent. So on the whole if you look at blended margins definitely there was an impact because the SAP growth was higher than the healthcare services growth.
The blended margins might have diminished but clearly margins in both healthcare services and pharmacy have grown.
Q: Last fiscal you did an EPS of Rs 22, first half you have done about close to Rs 12. Last year you had doubled from Rs 11 to 22 in H2, will the market be safe in assuming that this time around you will do around Rs 24 in EPS?
A: I think Q2 will look much better. This quarter we did see even though revenues grew strongly at 17 percent, we were impacted by higher interest costs and depreciation which was very high of 18 percent because we added 500 beds.
I believe that the filling up of beds will add to both the top line and the EBITDA and therefore some of it should flow down to profit. So we do expect that at the end of the year we will have a better performance and that H1 is not an indication of what we will see at the end of the year.
Q: What will your second half revenue growth look like, you did mention the addition of beds but what will that translate into in terms of revenue growth early in the second half?
A: I think without giving any forward looking statements, I would see that in an economy that is growing 5 percent if we have maintained three times that, it is a good sign because our case-mix whatever else is happening, the case-mix is very strong and the standalone pharmacy (SAP) is growing and store closures have become less and therefore topline for both SAP and this is growing and definitely we are looking at cost very carefully to maintain margins.
So the occupancy from these 500 beds we have got all the licenses etc and doctors falling in place, will start kicking in towards the end of the year.
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