Apollo Hospitals shares plunge 7% amid heavy trading volumes

Apollo Hospitals shares were the worst hit on the Nifty 50.

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Shares of Apollo Hospitals Enterprises plunged over 7 percent on February 11 amid heavy trading volumes despite the company's better-than-expected Q3 numbers. As much as eight lakh shares of the hospital major changed hands on the exchanges thus far, already more than twofold the one-month daily traded average of three lakh shares.

At 11.27 am, shares of Apollo Hospitals Enterprises were trading at Rs 6,329.50 on the NSE. With this, the stock is down 13 percent year-to-date. On the derivatives front, open interest in the stock surged surged over 16 percent, suggesting a sharp build-up of short positions, which also added to the selling pressure in the stock.

The hospital major's Q3 earnings show highlighted a fairly positive performance as net profit jumped 52 percent on year to Rs 372.3 crore, well above the Moneycontrol's estimated Rs 347 crore. Revenue also grew 14 percent on year to Rs 5,527 crore, largely aligned with expectations of Rs 5,575 crore.

The company's consolidated revenue was driven by a 15 percent on-year growth in Apollo Health & Lifestyle Ltd (AHLL) and Apollo Healthco, alongside a 13 percent growth in the flagship healthcare services segment.

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Operational performance also improved on the back of reduced losses in the company's digital pharmacy business--Apollo 24/7. EBITDA margin expanded to 13.8 percent in Q3, coming right on expectations, up from 13 percent in the year ago quarter.

Meanwhile, the company's Apollo HealthCo also delivered a fifth straight quarter of being EBITDA positive, another feat for Apollo Hospitals. Looking ahead, the management also seems optimistic of sustaining strong growth.

In an interaction with CNBC-TV18, Suneeta Reddy, Managing Director of Apollo Hospitals, guided for the Average Revenue Per Occupied Bed (ARPOB) to sustain at Rs 60,000, growing steadily at a rate of 4 percent, with the full-year ARPOB growth projected to reach 8 percent.

Meanwhile, Reddy also reiterated that Apollo Health & Lifestyle sat on track to break even by Q1FY26, with a sustainable margin of 15 percent.

Morgan Stanley, which has an 'overweight' rating on Apollo Hospitals, with a target price of Rs 8,159 stated that while 24/7 cash losses have reduced quarter-on-quarter, the gross merchandise value (GMV) growth has also moderated. Investors will be on the lookout to find answers for the GMV moderation in the company's post-earnings investor call, scheduled for later today.

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.