Apollo Hospitals jumps 3.5% after KIE's upgrade to 'buy,' forecasting 20% upside

Apollo Hospitals are up over 4 percent for the week.

Shares of Apollo Hospitals Enterprise jumped 3.5 percent on January 21 after Kotak Institutional Equities upgraded its rating from 'add' to 'buy.' The upgrade was driven by expectations of fewer execution risks, as Apollo’s greenfield bed expansion, though accounting for 70 percent of its total bed growth, is still significantly lower than that of most peers.

At 12.47 pm, shares of Apollo Hospitals were trading at Rs 6,981.05 on the NSE.

Kotak highlighted Apollo’s 17 percent bed expansion plan for FY25-27, noting that it is lower in percentage terms compared to most peers, which helps reduce earnings risk amid the sector's aggressive expansion spree. The brokerage also emphasised Apollo’s stronger competitive position, supported by its diversified presence and limited exposure to the three potentially hypercompetitive micro-markets of Delhi NCR.

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Kotak marginally raised its price target for Apollo Hospitals to Rs 8,270, naming it as the preferred pick within the hospital sector. While the firm expressed less confidence in Apollo’s 24/7 business, it acknowledged the vertical's strong free cash flow as a mitigating factor.

Additionally, Kotak anticipates robust growth in Apollo’s offline pharmacy segment, driven by improving margins and a more measured expansion strategy. However, the ongoing reset in Apollo 24/7’s operating model—marked by reduced digital marketing spends and changes in GMV calculation—may lead to subdued GMV growth in Q3 FY25.

Despite this short-term challenge, the brokerage remains optimistic, projecting a rebound in Apollo 24/7’s GMV starting Q1 FY26, driven by pharmacy sales, corporate tie-ups, digital app monetization, and an insurance module ramp-up.