Buy Apollo Hospitals Enterprise target of Rs 8000 Prabhudas Lilladher

Prabhudas Lilladher's research report on Apollo Hospitals Enterprise

Apollo Hospitals Enterprise (APHS) reported consolidated EBITDA of Rs8.2bn (up 30% YoY), 3% beat to our estimates. Adjusted for 24x7 losses (~Rs1.35bn), EBITDA was Rs9.5bn, up 15% 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 omnichannel digital health business. Scale-up in Apollo HealthCo has been on track with likely breakeven in EBITDA of digital business over the next 4-5 quarters. Further, the management guidance of Rs20bn EBITDA of the merged entity by FY28, provides comfort. Our FY25E and FY26E EBITDA estimates broadly remain unchanged.

Outlook

Overall we estimate 17% EBITDA CAGR over FY24-26E (ex 24x7 losses). We maintain ‘BUY’ rating with a revised TP of Rs8,000/share as we roll forward. We ascribe 26x EV/EBITDA multiple to hospital and offline pharmacy, and assign 1x sales to the 24/7.

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