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Informist, Friday, Oct. 18, 2024

 

By Narayana Krishna

 

HYDERABAD - Higher occupancy in hospitals business, coupled with better performance in other verticals, is likely to boost Apollo Hospitals Enterprise Ltd's September quarter earnings, analysts said. The Chennai-based healthcare major is expected to report a consolidated net profit of INR 3.6 billion for Jul-Sept, up 54% on year, with revenue rising 13% on year to INR 54.9 billion, according to an average of estimates from six brokerage houses.

 

For Jul-Sept last year, Apollo Hospitals reported a net profit of INR 2.33 billion on revenue of INR 48.47 billion. Sequentially, the company's net profit is seen rising 18%, while revenue is seen increasing 8%, according to the estimates. For Apr-Jun, the company reported a net profit of INR 3.05 billion on revenue of INR 50.86 billion.

 

The company's pharmacy retailing arm, Apollo HealthCo Ltd, and diagnostics services arm, Apollo Health and Lifestyle Ltd, are also expected to post decent growth for the quarter, analysts said. Apollo Hospitals is scheduled to announce its Jul-Sept earnings on Nov. 6.

 

Among the six estimates, Apollo Hospitals' Jul-Sept net profit is seen in the range of INR 3.46 billion, the lowest by Elara Securities, to INR 3.66 billion, the highest by Prabhudas Lilladher. The estimates for revenue range from INR 53.95 billion, the lowest by Motilal Oswal, to INR 55.59 billion, the highest by Nuvama Wealth.

 

Brokerage firms HDFC Securities, Kotak Institutional Equities, Nuvama Wealth, and Prabhudas Lilladher are positive on the healthcare provider's hospital business, and expect a 12-14% year-on-year sales growth in that segment, led by improved occupancy across hospitals. Apollo Hospitals has nearly 10,000 beds spread across 73 hospitals in the country. Nuvama Wealth, in its pre-earnings note, said that average revenue per occupied bed (ARPOB), a key metric to gauge growth in the hospitals business, is seen improving to INR 61,007 per bed, up 6% on year from INR 57,007 a year ago, led by increased footfall in hospitals.

 

Kotak Institutional Equities, Nuvama Wealth, and HDFC Securities expect Apollo HealthCo's Jul-Sept sales to grow 15% to 18% year-on-year, driven by robust growth in pharmacy retailing. Besides pharmacy retailing and distribution, Apollo HealthCo owns the Apollo 24/7 digital health platform.

 

For Apollo Health and Lifestyle, Kotak Institutional Equities expects 17% year-on-year sales growth for the quarter, led by better performance across all categories. Apollo Health operates diagnostic centres, specialty clinics, and other retail healthcare services under the Apollo brand.

 

Analysts expect Apollo Hospitals Enterprises to report better margins, led by growth across all segments, lower operating costs, and better pricing in the hospitals business. The company's earnings before interest, tax, depreciation, and amortisation (EBITDA) margins are seen in the range of 13.5-14.4%, up from 12.9% a year ago.

 

Lower operating costs for Apollo 24/7 are also expected to help Apollo Hospitals Enterprise improve its overall margins for the quarter, analysts said. The average of estimates from six brokerages pegged EBITDA at INR 7.71 billion, with estimates ranging from INR 7.48 billion to INR 7.92 billion.

 

Markets will await commentary on the progress of expansion plans in Gurugram, Hyderabad, Kolkata, Pune, and Mysore. Analysts may also track the gross merchandise value achieved on the Apollo 24/7 platform.

 

Following are the Jul-Sept earnings estimates for Apollo Hospitals Enterprise Ltd based on reports compiled by Informist from six brokerage houses:

 

Broker name	Net Sales	Net Profit	EBITDA
	-------(In INR million)-------
Elara Securities (India) Pvt Ltd	54,099.00	3,459.00	7,811.00
HDFC Securities Ltd	55,458.00	3,648.00	7,918.00
Kotak Institutional Equities	55,243.00	3,607.00	7,484.00
Motilal Oswal Financial Services Ltd	53,950.00	3,616.00	7,580.00
Nuvama Wealth Management Ltd	55,590.00	3,557.00	7,616.00
Prabhudas Lilladher Pvt Ltd	54,892.00	3,664.00	7,898.00
Average	54,872.00	3,591.83	7,717.83

 

At 1350 IST, shares of Apollo Hospitals were trading at INR 6997.10 on the National Stock Exchange, up marginally from the previous close.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

 

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