Buy Apollo Hospitals Enterprise; target of Rs 8100: Prabhudas Lilladher

Prabhudas Lilladher's research report on Apollo Hospitals Enterprise

Apollo Hospitals Enterprise (APHS) reported consolidated EBITDA of Rs7.7bn (up 20% YoY), was in line with our estimates. Adjusted for 24x7 losses and ESOPs cost (~Rs1.6bn), EBITDA was Rs9.3bn, up 18% 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 fastgrowing 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 3-4 quarters. Further, the management guidance of Rs20bn EBITDA of the merged entity by FY28, provides comfort. Our FY26E and FY27E EBITDA estimates broadly remain unchanged. Overall, we estimate 16% EBITDA CAGR over FY25-27E (ex 24x7 losses).

Outlook

We maintain ‘BUY’ rating with TP of Rs8,100/share. We ascribe 26x EV/EBITDA multiple to hospital and offline pharmacy and assign 1x sales to the 24/7.