ICICI Direct has given Buy recommendation for Apollo Hospitals with a target price of Rs. 3170 in its research report issued on Feb 14, 2021
ICICI Direct’s research report on Apollo Hospitals
Q3 revenues, which came in at Rs 2760 crore are not comparable on YoY, QoQ basis due to restructuring of retail pharmacy to pharmacy distribution. Hospital segment grew 16.6% QoQ to Rs 1443 crore (down 3.4% YoY). AHLL segment revenues are back on the growth track registering 6.4% YoY growth to Rs 197 crore. Pharmacy distribution segment revenues came in at Rs 1126. EBITDA margins improved to 14.1% vs. 10.9% in Q2FY21 mainly due to lower staff cost stemming from pharmacy restructuring. Subsequently EBITDA grew 30.2% QoQ to Rs 390 crore. PAT for the quarter was at Rs 130 crore, up 41.6% YoY and nearly 4.7x of Q2FY21 net profit.
We upgrade from HOLD to BUY at a revised TP of Rs 3170 (earlier Rs 2310) on SOTP basis by valuing healthcare business (existing hospitals & JV) at 18x FY23E EV/EBITDA,