Buy Apollo Hospitals Enterprise; target of Rs 7764: Geojit Financial Services

Geojit Financial Services research report on Apollo Hospitals Enterprise

Apollo Hospitals Enterprise Ltd (Apollo) operates the largest network of hospitals in India with 73 centres and more than 6,000 pharmacies. Apollo's consolidated revenue rose 15.6% YoY to Rs. 5,628cr in Q2FY25, driven by notable growth across segments. Healthcare services rose 13.8% YoY to Rs. 2,920cr due to a 13% increase in revenue from insured patients and a 15% rise from patients making cash payments. The two sources together account for 83% of the hospital’s inpatient revenue. Revenue from digital health and pharmacy distribution climbed 17.3% YoY to Rs. 2,282cr, with average daily orders through pharma and diagnostic consultations increasing from 62,000 per day in Q2FY24 to 76,000 per day in Q2FY25. Offline pharmacy distribution revenue stood at Rs. 2,014cr, while Apollo’s digital platform generated Rs. 268cr. Retail health and diagnostics also saw revenue growth of 14.0% YoY to Rs 404cr, driven by higher footfalls. EBITDA surged 31.4% YoY to Rs 854cr and margin improved 190bps to 15.2% owing to a higher topline and reduced employee costs as a percentage of revenue.

Outlook

Hence, we reiterate our BUY rating on the stock with a revised target price of Rs. 7,764 based on the SOTP valuation.