Buy Apollo Hospitals Enterprise; target of Rs 10,500: Prabhudas Lilladher
Moneycontrol • 1 day ago
Key Investment Pillars
- Hospital business growth: APHS's hospital EBITDA grew 20% YoY, driven by 19% revenue growth in established hospitals and improving occupancy at 73%.
- Apollo HealthCo expansion: HealthCo revenue grew 23% YoY, with EBITDA rising 75% and digital business achieving cash breakeven in Q2FY27.
- Pharmacy and digital growth: Management aims to improve pharma unit economics by increasing daily orders by 20-30% over the next six months, targeting offline pharmacy-level margins.
- Demerger and value unlocking: The proposed demerger of the Omnichannel Pharmacy business, 24x7, and telehealth business into a newly listed entity is expected to unlock value by creating a focused, high-growth platform.
Thesis Validation Checklist
- Hospital occupancy and ARPP growth: Watch for sustained occupancy growth and increasing ARPP to validate the hospital business growth thesis.
- Apollo HealthCo margin expansion: Monitor HealthCo's margin improvement, driven by increasing daily orders and improving pharma unit economics.
- Demerger progress: Track the progress of the demerger and the newly listed entity's performance to assess value unlocking.
- Competition and regulatory changes: Be aware of potential competition and regulatory changes, such as the revised price caps across medicines, which may impact pharmacy and distribution margins.