Apollo Hospitals - Q4 FY21 Result Report - YES Securities

(Rating: SELL, TP: Rs2,250, Downside: 30%)

- Reckon creating the consumer facing interface offering diagnostic tests, doctor consultation, OTC product sales does not have any inherent differentiation or barriers to entry.

- On the contrary, other corporate houses are also on a similar trajectory minus the physical infra - ownership of beds and doctors. Jury still out on in healthcare whether bed ownership is necessary to build scale but our sense is non-hospital players can also bring beds through tie-ups with other hospitals.

- Apollo 247 has had a head start but believe it could be one of several platforms that would compete with others in targeting compatible users

- Remain wary of competition which is the biggest challenge as narrative pivots from hospitals to unlocking value in HealthCo. Our Sell was premised on the slow growing hospital business that lacked triggers. With repivot and interest building in HealthCo, we would still be cautious as unlike stakes in physical infra ownership, digital platforms are largely winner takes all and Apollo 247 would be one amongst several such competing platforms. EBIDTA break even in year 3 implies execution and scale up keenly eyed as competition chalks out a similar ecosystem

- We revise multiple to 2x EV/sales assigned to pharmacy and maintain hospital EV/EBIDTA at 11x. We also raise FY23 EPS by ~20% to factor in lower tax rate and better EBIDTA performance at Proton. Our TP change to Rs2,250 (earlier Rs1,300) is largely based on FY23 SOTP + increased EPS assumption.

Shares of APOLLO HOSPITALS ENTERPRISE LTD. was last trading in BSE at Rs.3438.7 as compared to the previous close of Rs. 3203.7. The total number of shares traded during the day was 167385 in over 14759 trades.

The stock hit an intraday high of Rs. 3464.95 and intraday low of 3200. The net turnover during the day was Rs. 567411028.

Source : Equity Bulls

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