Apollo Hospitals - Relatively muted quarter; one-offs impact Chennai cluster’s performance: CRISIL

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26 Aug, 2025 12:21

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CRISIL's research report on Apollo Hospitals

 
Apollo Hospitals Enterprise Ltd’s (Apollo’s) Q4FY17 standalone and consolidated earnings were slightly below CRISIL Research’s expectations. Standalone revenue increased 14.8% y-o-y, driven by the pharmacy business (revenue up 22% y-o-y). The healthcare services business (hospitals) grew at a slightly slower pace of 9.5% y-o-y and 3% q-o-q to Rs 9.2 bn owing to relatively muted volume growth in Q4FY17. Standalone EBITDA margin contracted 235 bps y-o-y and 131 bps q-o-q to 10.2% y-o-y owing to rising share of the low-margin pharmacy business and increasing revenue from the new hospitals which are yet to turn EBITDA positive. Cut in stent prices by the regulatory authorities in February 2017 further contracted revenue by Rs 80-100 mn. Consequently, adjusted PAT declined 40.8% y-o-y and 33.9% q-o-q to Rs 482 mn. We expect revenue growth momentum to sustain in the future, aided by the pharmacy business and ramp-up in occupancy at the new hospitals. Given its well-established position, robust long-term industry prospects and proven management capability, we remain positive on Apollo and retain our fundamental grade of 5/5.

We have lowered our earnings estimates to factor in higher-than-expected operating expenses for the new hospitals. Since the impact on discounted cash flow (DCF)-based fair value is immaterial, we maintain it at Rs 1,510. At the current market price of Rs 1,275, our valuation grade is 4/5.

 
Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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