Apollo Hospitals surges 15% on strong Q1 results

Shares of Apollo Hospital Enterprises (AHEL) have surged 15% to Rs 1,087 per share on the BSE after the company posted a strong 70.86% year on year growth in net profit at Rs 601.6 million during the quarter ended June 30, 2018 (Q1FY19). It had a profit of Rs 352.1 million during the same period last year.

The trading volumes on the counter jumped nearly 10-fold with a combined 3.88 million equity shares changed hands on the BSE and NSE till 02:01 pm.

The company’s revenue grew 16% to Rs 19.12 billion during the quarter compared to Rs 16.46 billion during the same period last year. The company saw a growth of 12% in healthcare services and 20% in standalone pharmacies.

Prathap C Reddy, chairman of Apollo Hospitals, said, “The first quarter of this fiscal year has got off to a good start. We continue to strengthen our healthcare portfolio to benefit our patients and arm our doctors with the latest in artificial intelligence and medical technology.”

The company is looking at a revenue growth of around 16% this year, with a focus on profitability and higher earnings before interest, tax, depreciation and amortisation or Ebitda margins, and not on adding new capacity. The impact on Ebitda margins from commissioning of new facilities, GST implementation, regulations on stent pricing and knee implants as well as investments in medical teams have bottomed out, the Business Standard reported.

“Apollo has pursued an aggressive expansion plan, which has resulted in a subdued earnings phase over the past three years. Further, regulatory headwinds have delayed earnings recovery. However, we see a 20% EBITDA CAGR over FY18-20E vs 3% over FY15-18, led by price rationalization, reducing losses from AHLL and increasing profit from new hospitals,” analysts at Elara Capital said in a quarterly update. The brokerage firm retains ‘buy’ rating on the stock with a target price of Rs 1,450 per share.

Apollo Hospitals