ICICI Direct recommended hold rating on Apollo Hospitals with a target price of Rs 1500 in its research report dated August 16, 2019.
ICICI Direct's research report on Apollo Hospitals
Q1FY20 revenues grew 16.7% YoY to Rs 2229.2 crore (I-direct estimate: Rs 2234.8 crore) on the back of 18.5% YoY growth in pharmacy business to Rs 1056.8 crore (I-direct estimate: Rs 1068.2 crore) and 15.1% YoY growth in hospital business to Rs 1172.6 crore (I-direct estimate: Rs 1166.9 crore). EBITDA margins improved 275 bps YoY to 14.6% also higher than I-direct estimate of 12.4% mainly due to positive impact of Ind-AS 116. EBITDA grew 43.7% YoY at Rs 325.8 crore (I-direct estimate: Rs 277.4 crore). Net profit grew 31.8% to Rs 79.3 crore (I-direct estimate: Rs 85.5 crore). Delta vis-à-vis EBITDA was mainly due to negative impact of Ind-AS 116.
We value the stock on an SOTP basis by valuing the healthcare business (existing hospitals & JV) at 13x FY21E EV/EBITDA, healthcare business (new hospitals and JVs) and pharmacy business at 1.5x FY20E EV/sales. We ascribe a target price of Rs 1500.
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