Apollo Hospitals Share Price Gains 3% on Strong Q4 Results

On May 31, Apollo Hospitals Enterprise saw its shares climb more than 3% in trading as investors responded positively to the company's strong earnings results for the March quarter of FY24. The hospital giant demonstrated comprehensive growth, achieving improvements in revenue, profit, and profitability. By 09:18 am IST, Apollo Hospitals Enterprise share price were trading at ₹5,897.60 on the NSE.

In Q4FY24, the company's net profit surged by more than 77% year-over-year, reaching ₹258 crore, up from ₹146 crore in the same quarter of the previous fiscal year. This impressive performance aligns closely with Moneycontrol's estimated net profit of ₹257 crore.

In the same period last year, Apollo's net profit was significantly impacted by substantial losses incurred while expanding its online business. However, this year, reduced losses in Apollo HealthCo have not only strengthened the company's bottom line but also enhanced its overall operational performance. 

As previously indicated by the management, Apollo HealthCo became EBITDA positive in Q4 FY24, reporting an EBITDA of ₹11.70 crore compared to a loss of ₹72.10 crore in the same period last year. This turnaround was driven by cost optimization and increased operational revenue, allowing Apollo HealthCo to reach EBITDA breakeven. Consequently, the company's EBITDA margin improved to 13% in the January-March period, up from 11.3% in the corresponding quarter of the previous year.

The company's revenue increased by 15% year-over-year, reaching ₹4,944 crore compared to ₹4,302 crore in the same quarter last year. This performance slightly exceeded analysts' expectations, as those polled by Moneycontrol had projected the company's revenue to be approximately ₹4,927 crore.

Additionally, Apollo's hospital business reported an occupancy rate of 65% in Q4, up from 64% in the same period last year. The Average Revenue Per Occupied Bed (ARPOB) also increased by 12% year-over-year, reaching ₹59,523. 

Brokerage firm Prabhudas Lilladher has maintained a "Buy" rating on Apollo Hospitals, setting a target price of ₹7,050 per share. Prabhudas Lilladher views the anticipated merger of Keimed with AHL positively, estimating it at $0.8-0.9 billion and considering it a move that eliminates concerns about potential financial leakages. According to their report on Apollo Hospitals, the company's 100% subsidiary, Apollo Health, has entered into an agreement to raise ₹24.75 billion ($300 million) in equity capital from Advent International (Advent) for a 16.8% stake.

Additionally, Apollo Health has proposed integrating the promoter group entity, Keimed Pvt Ltd (Keimed), into Apollo Health in a phased approach. This strategy aims to establish a leading integrated pharmacy distribution business, which will be complemented by a rapidly expanding omni-channel digital health business. 

According to a report by Morgan Stanley on Apollo Hospitals, the firm maintains an "Overweight" rating on the stock with a target price of ₹7,181. Apollo Hospitals reported a 15% year-on-year increase in consolidated revenue for the fourth quarter, driven by strong performances in its healthcare services, Apollo HealthCo, and AHLL divisions. The consolidated EBITDA, after factoring in the costs associated with the 24×7 services, stood at ₹640 crore, aligning with Morgan Stanley’s estimates. As of March 2024, the company reported a consolidated net debt of ₹15,000 crore.

Apollo Hospitals Enterprise Limited (Apollo Hospitals) is a leading healthcare provider in Asia, known for its comprehensive and integrated healthcare services. Established in 1983 by Dr. Prathap C. Reddy, the company serves patients in diverse specialties such as cardiology, oncology, neurology, orthopedics, gastroenterology, and more. It also offers advanced treatments like Proton Therapy for cancer, bone marrow transplants, robotic surgeries, minimally invasive cardiac surgeries, and more. Apollo also introduced South East Asia’s first Proton Therapy Centre for cancer treatment in Chennai.