Apollo Hospitals Enterprise Receives Bullish Recommendation, Target Price Set at Rs 9350
Apollo Hospitals Enterprise Reports Strong Q1 FY27 Results
Apollo Hospitals Enterprise, a leading healthcare provider, has reported consolidated EBITDA of INR10.1 billion for the quarter ended September 30, 2023, marking a 31% year-over-year (YoY) increase. This represents a 5% outperformance against the research firm Prabhudas Lilladher's estimates.
When adjusted for 24x7 losses and ESOPs cost, the EBITDA stood at INR11.1 billion, up 19% YoY. The company's strategic initiatives, including the stake sale in HealthCo to Advent and merger with Keimed, are expected to drive growth in the integrated pharmacy and digital health platform. Apollo HealthCo has shown significant scaling, and its digital business is on track to achieve EBITDA breakeven in the coming quarters.
Key Highlights of the Quarter
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| Q1 FY27 (Actual) | Prabhudas Lilladher Estimates | |
|---|---|---|
| Consolidated EBITDA | INR10.1 billion | INR9.65 billion |
| Adjusted EBITDA (excl. 24x7 losses and ESOPs) | INR11.1 billion | INR9.35 billion |
The management has provided guidance for the merged entity, expecting EBITDA to range between INR16.5 billion and INR17.5 billion by Q4 FY27, representing an exit run-rate. Additionally, the company has announced the demerger of its Omnichannel Pharmacy business, 24*7, and telehealth business into a newly listed entity, aiming to unlock value by creating a focused, high-growth platform in the pharmacy and digital healthcare space.
Outlook and Rating
Prabhudas Lilladher maintains a 'BUY' rating for Apollo Hospitals Enterprise with a revised target price of INR9.350 per share. The research firm estimates 25% EBITDA CAGR over FY26-28E, with marginally increased FY27 and FY28E EBITDA estimates. The target multiple ascribed to the hospital and offline pharmacy business is 25x EV/EBITDA, while the multiple for Apollo Health Limited (AHLL) is 20x EV/EBITDA.
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Investor Takeaway
Investors should consider Apollo Hospitals Enterprise for its positive moves towards an integrated pharmacy and digital health platform.
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