Buy Apollo Hospitals; target of Rs 10400: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Hospital Segment Growth: The hospital segment is expected to drive growth, with a 14% increase in inpatient volumes, 71% occupancy, and 8% growth in average revenue per patient (ARPP). The company plans to add 1,395 census beds across FY26-27, with 520 beds already operational.
  • Pharmacy Business Expansion: The pharmacy business is expected to continue its growth trajectory, with 373 net new stores added in 1HFY27, taking the total store count to 7,662. The online pharmacy platform, Apollo 24/7, has also shown improvement, with a 18% YoY growth in GMV.
  • HealthCo Segment: The HealthCo segment is expected to deliver ~15% revenue CAGR over FY26-28, driven by continued pharmacy store additions, higher digital penetration, and growth in Apollo 24/7.
  • Diagnostics and Primary Care: The diagnostics business has shown a 27% growth in revenue, driven by the expansion of the diagnostics network and growth in wellness and specialty testing. The primary care business has also shown a 12% revenue growth, with the addition of 16 primary care partners and 7 dialysis centers.

Thesis Validation Checklist

To validate the investment thesis, investors should monitor the following signals over the next 12 months:

  • Hospital Segment Growth: Monitor the growth in inpatient volumes, occupancy, and ARPP to assess the hospital segment's performance.
  • Pharmacy Business Expansion: Track the addition of new stores, growth in online pharmacy GMV, and improvement in pharmacy margins to assess the pharmacy business's expansion.
  • HealthCo Segment: Monitor the growth in HealthCo revenue, digital penetration, and Apollo 24/7 GMV to assess the segment's performance.
  • Diagnostics and Primary Care: Track the growth in diagnostics revenue, expansion of the diagnostics network, and primary care business to assess the segment's performance.