Prabhudas Lilladher's research report on Apollo Hospitals Enterprise
Apollo Hospitals Enterprise (APHS) reported consolidated EBITDA of Rs6.4bn (up 31% YoY), in line with our estimates. Adjusted for 24x7 losses and ESOP cost (~Rs1.5bn), EBITDA was Rs7.9bn, up 12% YoY. The recent stake sale in HealthCo to Advent and merger with Keimed are a positive step and will lead to an integrated pharmacy distribution business complemented by the fast-growing omni-channel digital health business. Scale-up in Apollo HealthCo has been on track with likely breakeven in EBITDA of digital business over the next 6-8 quarters. Further, the management guidance of Rs17.5-20bn EBITDA of the merged entity by FY27, provides comfort. Our FY25E and FY26E EBITDA estimates broadly remain unchanged. Overall we estimate 18% EBITDA CAGR over FY24-26E (ex 24x7 losses).
Outlook
We maintain ‘BUY’ rating with a TP of Rs7,050/share. We ascribe 25x EV/EBITDA multiple to hospital and offline pharmacy, and assign 1x sales to the 24/7 business.
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