Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Apollo: Ambitious targets - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 14, 2001

    Apollo: Ambitious targets

    Apollo Hospitals Enterprises Ltd (AHEL) is well placed to take advantage of the opening up of the insurance sector. In 99-00, Apollo merged three entities of Apollo group viz, Deccan Hospital, Indian Hospitals and Omsindori Hospitals under its banner. Consequent to the merger, Apollo Hospitals now has a capacity of 2600 beds, the largest private sector healthcare infrastructure in South Asia.

    (Rs m) 2QFY01 2QFY02 % change
    Sales 760 943 24.2%
    Other Income 53 12 -77.2%
    Expenditure 609 730 19.8%
    Operating Profit (EBDIT) 150 213 41.9%
    Operating Profit Margin (%) 19.8% 22.6%  
    Interest 50 65 30.3%
    Depreciation 43 45 5.2%
    Profit before Tax 110 115 4.5%
    Extraordinary Income   (14)  
    Tax 27 44 63.0%
    Profit after Tax/(Loss) 83 57 -31.4%
    Net profit margin (%) 10.9% 6.0%  
    No. of Shares (eoy) (m) 15.9 39.5  
    Diluted Earnings per share* 5.2 5.8  
    P/E (at current price)   19.4  
    (*- annualised)      

    AHEL has presence across the entire spectrum of healthcare services. Currently, more than 60% of the company’s revenues are from owned hospitals, which provide state of the art facility. Secondly, sales from pharmacy (owned) account for another 30% of the revenues. This is a high volume low margin business. Pharmacy network accounts for the balance. AHEL has chain of over 40 pharmacies in the country. It has recently tied-up with Indian Oil Corporation (IOC) to set-up pharmacies at around 500 select petrol pumps over the next 3 years. Instead of incurring huge capex on building hospitals, Apollo is targeting revenue streams from managing hospitals owned and operated by a third party. This move should see the company improve its RoNW from the present 17%-18%.

    As for the future, the company plans to increase the number of beds to 6,000 and the number of pharmacies to over 1,000 over the next five years. This would be done via franchising the ‘Apollo’ brand. Besides, the company also has plans to use the Internet to provide the services of their specialists through telemedicine (where network capable x–ray printers, scanners transmit the results of the patients examination to specialists who give their advice online). The project was launched in April 2000 and has links with Apollo Hospitals in Chennai, Aragonda and Hyderabad.

    At the current market price of Rs 112, the stock is trading at 19x FY01 earnings. The demand for healthcare in India is mind boggling. On an average there is one bed for 1,300 people while the ratio is 1:250 in the west. A growing population, increasing awareness of the healthcare facilities and the opening up of health insurance is likely to lead to a steady demand for quality healthcare which Apollo is well poised to tap. The group is also planning a major entry in health insurance sector. However, as the size of the projects, which the group is eyeing are relatively ambitious, any slippage in terms of financial management could spell disaster for the company.



    Equitymaster requests your view! Post a comment on "Apollo: Ambitious targets". Click here!


    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    Sun Pharma: Price Erosion in US Impacts Growth (Quarterly Results Update - Detailed)

    May 30, 2017

    US markets decline while other geographies grow in the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in APOLLO HOSPITALS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Compare Company With Charts