Up 3x in 3 years, can Apollo Hospitals continue to outperform?

On hospital major Apollo Hospitals, brokerage firm ICICI Direct has maintained an upbeat outlook with a ‘buy’ rating for a target price of Rs 5,230, implying possible gains of up to 15%.

The company during the second quarter delivered a strong performance as per the brokerage's estimates. The company's revenue during the period grew 12% quarter on quarter (QoQ) to Rs 4,251 crore. Nevertheless, the company's adjusted net profit declined 35% QoQ to Rs 205 crore.

The brokerage further iterated that it maintains ‘buy’ on the counter given the pick-up in elective surgeries as well as margins at hospitals through better operating leverage, impending value unlocking through Apollo Health and increase in reach for all verticals through integrated digital platform.


ICICI Direct sees the stock's future performance to be driven by:

Optical transformation, which Apollo Hospitals is undergoing as of now, facilitates establishment of an omni-channel healthcare platform that could set the stage for tapping new-age investors and enable rapid scale up of the digital healthcare platform.

Also, business normalisation is expected as normalcy has been restored post the Covid-led disruption.

Moreover, new hospitals, other ventures are turning profitable on the back of a judicious case mix, besides better occupancy & ramp up at new facilities.

Further, the brokerage states slower ramp up in elective surgeries as well as higher operational expenses in the 24/7 services departments are the key downside risk for the hospital stock.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)