Apollo Hospital

17 Aug

Infrastructure in place to compete in online pharmacy space – Apollo Hospitals

Update on the Indian Equity Market:

On Tuesday, NIFTY closed 0.3% up at 16,615. Top gainers in NIFTY50 were TATACONSUM (+3.8%), WIPRO (+3.3%), and TECHM (+3.2%). The top losers were JSWSTEEL (-2.4%), ADANIPORTS (-2.3%), and TATAMOTORS (-2.2%). The top gaining sectors were IT (+2.6%), HEALTHCARE (+1.7%), and FMCG (+1.4%) while the top sectoral losers were METAL (-2.3%), PSU BANK (-1.8%), and PRIVATE BANK (-0.8%).

Infrastructure in place to compete in online pharmacy space – Apollo Hospitals

Excerpts of an interview with Ms Suneeta Reddy, MD of Apollo Hospitals (APOLLOHOSP), published on ET Now on 17th August 2021:

  • In 1QFY22, 26% of the total 30% revenue growth was because of Covid revenue. Surgical volumes have started picking up from July 2021.
  • In an attempt to have an omnichannel presence, Apollo’s 247 digital platform offers services, such as online pharmacy and teleconsultations, that are easier to access for the customer. 247 is helping Apollo to expand its reach and funnel patients into the system.
  • 247 is the fastest growing healthcare app in India. Apollo has earmarked Rs 1,500 mn in FY22E as spends for the digital platform, as customer acquisition and marketing are high for the business.
  • Apollo pharmacies have crossed 4,200 stores in India and the company is planning another 150 stores addition. Apollo has a distribution presence in 16,000 pin codes. Due to the wide reach, Apollo has the capability of 24×7 delivery within two hours which is a USP in the e-pharmacy space.
  • In addition to the distribution capabilities, Apollo has 5,500 doctors available for tele-consult within 15 minutes and testing infrastructure. All these factors will help Apollo to compete with other corporate houses entering the online pharmacy space.
  • Apollo plans to spend Rs 2,500 mn on capex in FY22E and Rs 4,500 mn on an acquisition. With a debt-to-equity ratio of 0.48 and cash and equivalents of Rs 8,800 mn, Apollo is fully funded to undertake the investments.

Asset Multiplier comments:

  • Online pharmacies have seen a big growth in revenues during the covid-19 second wave. Consumers are preferring the convenience and limited contact nature of online shopping of common medicines, household medical devices such as oximeters, thermometers, and certain FMCG products sold by these players.

 

Consensus Estimate: (Source: market screener)

 

  • The closing price of APOLLOHOSP was ₹ 4,921/- as of 17-August-2021.  It traded at 86x/ 66x/ 53x the consensus earnings estimate of ₹ 56.9/ 75.1/ 92.8 for FY22E/23E/24E respectively.
  • The consensus price target is ₹ 4,399/- which trades at 47x the earnings estimate for FY24E of ₹ 92.8/-

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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16 Feb

Non-COVID business recovered, saw 40% pick-up – Apollo Hospital

Update on the Indian Equity Market:

On Tuesday, NIFTY closed at 15,313 (-0.01%). Top gainers in NIFTY50 were Power Grid (+6.3%), ONGC (+4.9%), and Tata Steel (+3.8%). The top losers were ICICI Bank (-2.3%), Axis Bank (-2.2%), and Eicher Motors (-1.6%). The top sectoral gainers were METAL (+2.9%), PSU BANK (+1.6%), and PHARMA (+0.5%) and sectoral losers were MEDIA (-0.8%), FMCG (-0.7%) and BANK (-0.5%)

Excerpts of an interview with Ms. Sunita Reddy, MD, Apollo Hospital (APOLLOHOSP)  with CNBC -TV18 dated 15th February 2021

  • Total hospital occupancy is at 63 percent. Out of these, 17 percent of the revenue is coming from COVID.
  • The non-COVID business has recovered, they have seen 40 percent pick-up in non-COVID work. There has been a 36 percent improvement in elective surgical work.
  • This has reflected in the average revenue per occupied bed (ARPOB) which was at Rs 38,000 in 2QFY21 moving up to Rs 40,100 in 3QFY21.
  • In terms of international patient inflow, it was barely 2 percent. Most of the international patients were from countries like Bangladesh and Myanmar. Definite improvement is expected from March when travel opens up.
  • The digital business peaked during COVID. They had done about 250,000 teleconsults during the first two quarters and in Q3 they are doing about 2,000 a day.
  • Many of the doctors are now coming back to the offices, they are seeing growth again in the OP.
  • They have seen 21 percent growth in the pharmacy business, with both the front end and the back end. Margins have been good at ~6.5 percent and this is after they added 150 stores in 3QFY21 and about 400 stores for the full year.  They are currently at 4,000 stores in the pharmacy.
  • Pharmacy business revenues have picked up by 16.4 percent and continue to grow. Margins continue to improve.
  • Going forward they are expected to see healthy margins because in the mature stores they are seeing margins of 9 percent.
  • They are still seeing strong growth in the diagnostic business in spite of tapering off of COVID.

Asset Multiplier comments:

  • Rapid expansion and maturity of older hospitals have kept overall growth higher. Health care technology investment and deals continue to provide opportunities.
  • The health care industry’s response to COVID 19 has been one of persistence and commitment, especially by front-line caregivers. The pandemic has significantly shifted industry trends and accelerated the pace of change.
  • Digitalization has become a major component in a sustainable healthcare model. Virtual care and telemedicine enabled the continuity of care during the recent health crisis, and these solutions are expected to continue growing in importance as patients value efficiency and convenience.

Consensus Estimate: (Source: market screener and investing.com websites)

  • The closing price of APOLLOHOSP was ₹ 3,205/- as of 16-February-2021.  It traded at 348x/ 65x/ 44x the consensus earnings estimate of ₹ 9.2/ 49.1/ 72.8 for FY21E/22E/23E respectively.
  • The consensus price target is ₹ 2,898/- which trades at 40x the earnings estimate for FY23E of ₹ 72.8/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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