Apollo Hospitals' well rounded Q2 performance sparks optimism among brokerages

The stock was the top Nifty gainer in the previous session after it surged close to 7 percent on the back of its solid Q2 performance.

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26 Aug, 2025 12:21

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Healthcare services major Apollo Hospitals' well rounded earnings performance for the fiscal second quarter, which reflected a strong show from all its verticals, has garnered praise from brokerages.

While Apollo HealthCo, the company's the digital health and pharmacy vertical, which offers online consultations and operates the 'Apollo 24/7' platform turned profitable for the first this quarter, the management guided its Apollo Health & Lifestyle vertical--the one that houses its retail health business-- to turn profitable in the next 5-6 quarters. Alongside that, Apollo's flagship hospitals business boasted a strong performance in Q2, delivering mid-teens growth on the back of robust occupancy that stood at a multi-quarter high, as noted by Jefferies.

The upbeat performance across businesses helped Apollo Hospitals deliver a beat on earnings expectations in Q2. Jefferies also highlighted the improvement in Apollo HealthCo's profitability even while meeting growth expectations. The brokerage believes Apollo is focusing on the right areas and thus delivering on growth and profitability, prompting Jefferies to retain its 'buy' call on the stock with a price target of Rs 8,140.

Meanwhile, Apollo also announced a mega capex drive for its hospitals business, aiming to commission six projects in the FY26, including hospital asset acquisitions, brownfield as well as greenfield expansions. Accordingly, analysts at Motilal Oswal Financial Service foresee a 16 percent, 18 percent and 30 percent on year growth in revenue, EBITDA and net profit for the healthcare services major over FY25-FY27.

Furthermore, MOFSL also raised its earnings estimates for Apollo by 9 percent, 3 percent, and 3 percent for FY25, FY26, and FY27, respectively, to account for factors including reduced marketing costs that enhance profitability in Healthco, increased patient flow in the hospital business leading to improved operating leverage, and additional business generated from insurance products and concierge services in Healthco. MOFSL held on to its 'buy' rating for Apollo Hospitals with a price target of Rs 8,660 for the stock.

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Looking ahead, Apollo Hospitals projects stable growth across its operations, expecting existing hospitals to see steady expansion with margins increasing by 50 basis points in FY25 and by an additional 50-100 basis points in FY26.

The company’s bed capacity expansion plan is on track, with approximately 1,400 new beds set to launch in FY26. While this addition may dilute margins by about 100 basis points initially, Apollo aims to reach breakeven within 12-18 months, analysts at HDFC Securities noted.

The company also targets 6-7 percent growth in Average Revenue Per Occupied Bed (ARPOB) and sustained occupancy rates in FY25. In HealthCo, the company has recalibrated its approach, moving away from its earlier 50 percent GMV growth guidance to prioritize a low-cash-burn growth model that enhances profitability.

Factoring these in, HDFC Securities has also reiterated its 'buy' call on the stock with a price target of Rs 8,250.

Shares of Apollo Hospitals also reacted positively to the bullish brokerage comments, extending its upmove from the previous session to gain another percent and hit a record high of Rs 7,545 on November 8. The stock was the top Nifty gainer in the previous session after it surged close to 7 percent on the back of its solid Q2 performance.

Also Read | Apollo Hospitals embarks on mega capex drive, to commission six projects in FY26

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