Apollo Hospitals - Q1FY21 Result Update - ICICI Securities

Q1 results witnessed the full impact of Covid-related challenges. Despite the significant drop in hospital occupancies, revenue drop was arrested by a significant uptick in pharmacy revenues. Revenues de-grew 15.6% YoY to Rs. 2172 crore due to a 41.2% YoY decline in hospital revenues to Rs. 795 crore amid the pandemic. On the other hand, Pharmacy segment posted strong revenue growth of 21.0% YoY to Rs. 1279 crore. EBITDA margins dropped to 1.6% vs. 13.8% in Q1FY20 due to negative operating leverage. Subsequently, EBITDA de-grew 90% YoY to Rs. 35.5 crore. Reported loss for the quarter was at Rs. (208) crore vs. net profit of Rs. 57 crore in Q1FY20.

Valuation & Outlook

The impact of Covid pandemic was seen across the hospital sector in Q1. While business normalisation in the healthcare segment is expected to be visible from H2FY21 onwards, Apollo's management has already charted a way to reduce costs by 15-20% in the short-term. On the other hand, structural cost saving initiatives are also underway to reduce costs in the long-term. We remain positive on the company as besides strong healthcare pedigree and asset base the company owns one of the best pharmacy models in the world, which provides overall cushion in difficult times. We value the stock on an SOTP basis by valuing the healthcare business (existing hospitals & JV) at 13x FY22E EV/EBITDA, healthcare (new hospitals) and pharmacy business at 1.5x and 2x FY22E EV/sales respectively. We have a target price of Rs. 1970.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ApolloHospitals_Q1FY21.pdf

Shares of APOLLO HOSPITALS ENTERPRISE LTD. was last trading in BSE at Rs.1688.9 as compared to the previous close of Rs. 1672.95. The total number of shares traded during the day was 78107 in over 5648 trades.

The stock hit an intraday high of Rs. 1738.65 and intraday low of 1678.95. The net turnover during the day was Rs. 133263189.

Source : Equity Bulls

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