"Apollo Hospitals Enterprises reported Q3FY14 results more or less in line with our estimates led by 13 percent growth in Healthcare services business & 23 percent growth in Pharmacy Business. While there has been moderate growth of ~4.5 percent in standalone IP volumes, price increases and improved case mix along with stronger OP volumes in Hyderabad (8.2 percent) & other clusters (17.2 percent) aided momentum."
OUTLOOK & VALUATION: "Apollo maintained its revenue growth in Q3FY14, while PAT posted a slower growth with the hospital segment coming under stress led by initial operating losses at its new facilities launched during Q4FY13. Going forward, even though near-term pressure on margins persists with Apollo embarking on an aggressive rollout of ~2000 beds over the next 2-3 years, however with increased focus on profitability we believe would help create a strong platform for future revenue & profit growth. We recommend a HOLD on the stock with the future prospects good in both, the hospital (as newer capacities stabilize faster) and pharmacy segments (turns more profitable). We maintain our TP of Rs. 976 based on 17x 1year forward EV/EBITDA. Any correction in the stock would be a good entry point with a long term view," says Sushil Finance research report.
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