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Apollo Hospitals numbers trend pre-Covid level, geared for next phase of growth

ICICI Securities 15 Feb 2022

What’s Buzzing:

Apollo Hospitals’ result was almost in line with I-direct estimates but skewed with hospitals lagging our expectations but pharmacies a beat.

Context:

Consolidated revenues grew 31.9% YoY to Rs 3638.9 crore (I-direct estimate of Rs 3616.8 crore) driven by growth of 40.9% YoY in hospitals segment to Rs 2023.9 crore vs I-direct estimate of Rs 2118.2 crore. Pharmacies grew 16.1% YoY to Rs 1307.4 crore (I-direct estimate: Rs 1113.8 crore) while AHLL revenues grew 58.7% YoY to Rs 313.2 crore (I-direct estimate: Rs 384.7 crore). EBITDA margins improved 199 bps YoY to 16.1% (I-direct estimate: 17%) mainly due to change in case mix. EBITDA in absolute terms grew 50.4% YoY to Rs 587 crore (I-direct estimate: Rs 613.3 crore).

Our perspective:

The healthcare business is more or less back to normalcy due to a rebound in patient visit and elective procedures. Structurally, Apollo is likely to maintain margins on back of cost reduction drives, expanding of complex procedures and profitability of new hospitals. AHLL remains a key management focus area while the pharmacy business remains a steady growth engine albeit in a changed structure. Apollo has strong healthcare pedigree and asset base, the company is on course to integrate all entities digitally to leverage its brand and physical presence.

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