Buy Apollo Hospitals; target of Rs 2060: ICICI Direct
ICICI Direct’s research report on Apollo Hospitals
Q3 standalone revenues grew 16.6% YoY to Rs 2529.5 crore (I-direct estimate: Rs 2501.3 crore) on the back of 21.8% YoY growth in pharmacy business to Rs 1232.6 crore (I-direct estimate: Rs 1205.4 crore) and 12.1% YoY growth in hospital business to Rs 1297.1 crore (I-direct estimate: Rs 1296.2 crore). EBITDA margins improved 254 bps YoY to 14.9% (I-direct estimate: 15.1%) mainly due to positive impact of Ind-AS 116. EBITDA grew 40.6% YoY at Rs 376.7 crore (I-direct estimate: Rs 378.7 crore). Net profit grew 9.0% to Rs 94.8 crore (I-direct estimate: Rs 100.6 crore). Delta vis-à-vis EBITDA was mainly due to negative impact of Ind-AS 116.
We value the stock on an SOTP basis by valuing the healthcare business (existing hospitals & JV) at 13x FY22E EV/EBITDA, healthcare business (new hospitals, JVs) and pharmacy business at 2x FY22E EV/sales. We have a target price of Rs 2060.
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