Hold Apollo Hospitals Enterprise: target of Rs 8080: ICICI Securities

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26 Aug, 2025 12:21

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Apollo Hospitals’ (Apollo) hospital biz grew slower at ~9% YoY in Q2FY26, though in line with our expectations. On a high base, occupancy declined to 69% in Q2 while lower international patients and few medical admissions also had an impact. It is on course to add ~1,257 census beds in the next 18 months across metros, where it has a higher ARPP (INR 205,257 per patient vs. INR 173,819 for the company) and RoCE (31% vs. 27% in non-metros). While hospital margins have been range bound for last couple of quarters, management is hopeful of absorbing the opex (INR 1.5bn p.a.) of new beds and maintaining its hospital margin at 24.6-25%. Demerger of pharmacy operations may happen by Q4FY27; it has reaffirmed its guidance of 20–25% revenue CAGR over FY25–27 with ~7% in FY27 (Healthco+Keimed). We cut FY26/27E EBITDA by ~1%. Downgrade to HOLD with a lower TP of INR 8,080.

We downgrade to HOLD (earlier Add) with a higher target price of INR 8,080 (earlier INR 8,200). We value the hospital business at 28x FY27E EV/EBITDA (earlier 27x FY27E EV/EBITDA),

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