Buy Apollo Hospitals; target of Rs 1336: Axis Direct

Axis Direct's research report on Apollo Hospitals

Apollo Hospitals' Q3FY18 revenue (adjusted for GST) increased 16% YoY to Rs 19 bn, while EBITDA increased 14% YoY to Rs 2.2 bn. Results could have been better had it not been for (1) Regulatory caps on stent & knee implant prices, (2) Rs 105 mn loss from Navi Mumbai facility; (3) Rs 70 mn guarantee money paid to doctors; & (4) Adverse GST rate revisions on input service.

Outlook

PAT of Apollo Hospitals over the past 5 years has remained flat on account of higher investments in setting up new hospitals and clinics. However, over FY17-20, Apollo is adding mere 265 beds and we expect beds which were commissioned over the past 3 years to show margin expansion. For all recommendations report, click here

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