Earnings Outlook
Apollo Hospitals may see healthy growth in PAT, margin YOY
This story was originally published at 10:47 IST on 7 February 2025
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By Narayana Krishna
HYDERABAD – Rise in hospital occupancy and growth in the pharmacy business are likely to help Apollo Hospitals Enterprise Ltd. to report healthy earnings for the December quarter on a year-on-year basis. Analysts said reduced operating expenses of its digital health platform, Apollo 24/7, will contribute to margin growth for the quarter. However, the Chennai-based healthcare major may experience a decline in net profit and revenue on a sequential basis due to a higher base, according to analysts.
The consolidated net profit of Apollo Hospitals is seen rising 40% on year to INR 3.4 billion and consolidated revenue may increase 14% on year to INR 55.2 billion, according to an average of estimates of five brokerages. Sequentially, the net profit is seen down 9% and revenue is likely to decline marginally by 1%, the estimates show.
Analysts have projected Apollo Hospitals' net profit to range from INR 3.3 billion—the lowest estimate by Kotak Institutional Equities—to INR 3.7 billion, the highest estimate by Nuvama Wealth Management Ltd. Revenue forecasts vary from INR 54.5 billion, the lowest projection by Motilal Oswal Financial Services Ltd, to INR 56.9 billion, the highest by Nuvama Wealth. The company is scheduled to announce its Oct-Dec earnings on Monday.
Brokerages Prabhudas Lilladher Pvt. Ltd. and Nuvama Wealth expect Apollo Hospitals' December quarter revenue to show a 13% on-year growth led by a rise in average revenue per occupied bed, a key metric for evaluating hospital performance. Nuvama Wealth has projected the company's average revenue per occupied bed at INR 61,441, up 9% on year and 4% on quarter.
HDFC Securities Ltd. has projected a 12% on-year growth in revenue, attributing the strong performance in the hospital business to steady occupancy and improved average revenue per occupied bed. The pharmacy retail arm, Apollo HealthCo Ltd., is expected to see a 17% on-year growth while Apollo Health & Lifestyle Ltd., another division, is projected to post 13% on-year revenue growth, according to HDFC Securities.
Most analysts expect Apollo Hospitals to report healthy margins for the quarter, driven by reduced operating costs in the digital platform Apollo 24/7 and improved realisation in the hospitals business.
HDFC Securities said steady improvement in hospital business margin and reduction in Apollo 24/7 spending will help overall earnings before interest, tax, depreciation and amortisation margin expansion, projecting the company's latest quarter EBTIDA margin at 13.8% against the 12.7% a year ago. Motilal Oswal sees the EBITDA margin at 13.9%.
The average EBITDA estimate from five brokerages is INR 7.6 billion, with the lowest at INR 7.4 billion and the highest at INR 7.8 billion.
Motilal Oswal, which has assigned a 'buy' rating and price target of INR 8,660 per share, said political turmoil in Bangladesh might affect Apollo Hospitals' international business. HDFC Securities has also assigned a 'buy' call with a target price of INR 8,250 per share.
At 1043 IST, shares of Apollo Hospitals were at INR 6,855.50 on the National Stock Exchange, down 0.3% from Thursday.
Following are the Oct-Dec earnings estimates for Apollo Hospitals based on reports from five brokerages in descending order by the estimate of net profit:
|
Brokerage name |
Net sales |
Net profit |
EBITDA |
|
(In INR Million) |
|||
|
Nuvama Wealth Management Ltd |
56,877.00 |
3,681.00 |
7,792.00 |
|
Motilal Oswal Financial Services Ltd |
54,502.00 |
3,452.00 |
7,576.00 |
|
Prabhudas Lilladher Pvt Ltd |
54,625.00 |
3,421.00 |
7,659.00 |
|
HDFC Securities Ltd |
55,401.00 |
3,366.00 |
7,651.00 |
|
Kotak Institutional Equities |
54,552.00 |
3,302.00 |
7,429.00 |
|
Average |
55,191.40 |
3,444.40 |
7,621.40 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Subhojit Sarkar
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