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Apollo Hospitals shares hit fresh record high; analysts positive on company's business reorganisation plans

On June 23, the company said its March-quarter consolidated net profit came at Rs 167.86 crore, down 23.48 percent from Rs 219.36 crore in the corresponding quarter of the previous financial year.

June 29, 2021 / 03:55 PM IST
 
 
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Shares of Apollo Hospitals Enterprises jumped over 4 percent to hit their fresh record high of Rs 3,604.15 on BSE in intraday trade on June 29.

Eventually, the stock closed 3.96 percent higher at Rs 3,591.90, extending the gains into the third consecutive session.

Shares of India's largest healthcare company have been gaining of late even as it reported a decline in its March quarter net profit.

However, the company's plans to reorganise its back-end pharmacy and 24/7 business have attracted brokerages and analysts.

Yash Gupta Equity Research Associate, Angel Broking, too, has a buy call on the stock and has increased the target price from Rs 3,700 to 3,900.

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Apollo hospital has created a new company with the name “Apollo HealthCo Limited '' in which the business of back-end pharmacy, Apollo 24/7, pharmacy retail and other private labels will be transferred on a slump sale basis, Gupta pointed out.

On June 23, the company said its March-quarter consolidated net profit came at Rs 167.86 crore, down 23.48 percent from Rs 219.36 crore in the corresponding quarter of the previous financial year.

Net sales came at Rs 2,867.95 crore in Q4FY21, down 1.86 percent from Rs 2,922.43 crore, in Q4FY20.

Brokerage firm ICICI Direct has a buy call on the stock with a target price of Rs 3,870 (earlier Rs 3,170) on SOTP basis by valuing healthcare business (existing hospitals & JV) at 20 times FY23E EV/EBITDA, healthcare (new hospitals), pharmacy both at 3 times, AHLL at 5 times FY23E EV/sales, respectively.

Brokerage firm Kotak Institutional Equities has an 'add' call on the stock with a target price of Rs 3,400.

"The company's Q4FY21 revenues and EBITDA were largely in line with our estimates with impressive recovery in healthcare segments. Potential capital raise in Apollo HealthCo will also provide funds to aggressively expand in the competitive e-health market. We like its focus on creating a digital platform to drive long-term growth," Kotak pointed out.

"With fundraising in the digital platform now imminent, we ascribe $200 mn valuations to Apollo 24/7. Our earnings estimate now factor in Rs 200 crore and Rs 150 crore of losses from 24/7 in FY2022-23E which is partially offset in FY2022 by vaccination opportunity," said Kotak.

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Nishant Kumar
first published: Jun 29, 2021 02:49 pm
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