Four reasons why Apollo Hospitals' stock continues to remain a 'Buy'

MUMBAI: The most valuable stock in the healthcare segment, Apollo Hospitals continues to be the favourite of the Street. There are four strong reasons why the company's stock will continue to remain a 'buy'.

Consistency in performance:

The company has been able to log consistent growth of 19-20% in revenues since last six quarters. During this period, it has managed to maintain its operating margin at 16-17%. The company has been consistently improving its performance in all its business segments of hospitals, pharmacies and insurance.

Adoption of Technology:

The company has been investing in technology like Proton (for oncology) and Robotics in order to improve its average revenue per operating bed and reduce its average length of patients' stay in the long term.

Visibility of Expansion plans:

The company plans to add 15 hospitals from the current 36 and add 2,990 beds to the current 5,982 by FY15. The company has already invested Rs 507 crore of the Rs 2170 crore of its share of total capex. This remaining capex is going to be funded by internal accruals, money realised from selling stake in its outsourcing business and through strategic fund raising. Such visibility on the company's expansion leaves little room for surprises for the investors.

Low Debt:

The company has a debt equity ratio of 0.4. At the end of December quarter, the total debt stands at over Rs 1,200 crore with a cash balance of over Rs 500 crore. This low leverage provides the company with room for funding its expansion plan.