HDFC Securities has reiterated a ‘Buy’ rating on Apollo Hospitals Enterprise Ltd, raising its target price to ₹7,520 from ₹7,030. The brokerage cites strong earnings visibility, margin improvement, and consistent growth across hospital, pharmacy, and diagnostics segments.
🔍 Key Reasons Behind the Upgrade
1. Strong Hospital Business Growth
Apollo continues to show healthy performance across its hospital division, with:
Steady improvement in bed occupancy (around 70%)
Expansion plans of over 1,700 beds by FY27
Improved EBITDA margins and operating leverage
2. Pharmacy Business Gains (HealthCo)
The standalone pharmacy and digital health vertical, HealthCo, is seeing:
Cost rationalisation and operational efficiencies
Breakeven achieved in recent quarters
A clear roadmap for profitability and margin expansion
3. Diagnostics (AHLL) Expansion
Apollo’s diagnostics arm has demonstrated:
15–18% annual revenue growth
Increasing margin visibility
Strengthening its presence in Tier 2/3 cities
📊 Financial Forecast
Revenue CAGR: ~16% for FY25–FY27
EBITDA CAGR: ~20% during the same period
Return ratios expected to improve due to asset-light growth and better utilization
Target valuation based on hospital core and separately valued verticals like pharmacy and AHLL
✅ What Investors Should Note
Apollo Hospitals is benefiting from diversified revenue streams, limiting dependency on one business unit
Its long-term digital and diagnostic strategies are aligned with India’s growing healthcare demand
The upgraded target indicates positive institutional confidence in its fundamentals and future earnings
⚠️ Key Risks to Watch
Execution delays in hospital capacity expansion
Regulatory pricing controls in diagnostics/pharma
Competitive pressures from standalone and e-health players
Profitability fluctuations in digital health despite breakeven
🧠 Expert Takeaway
HDFC Securities' upgraded view on Apollo is driven by:
Multi-engine growth strategy (Hospital, HealthCo, AHLL)
Operational efficiency across verticals
Improved clarity on margin trajectory
A strong, recession-resistant sector outlook
📌 FAQs
Q1: Why is Apollo Hospitals' target price increased to ₹7,520?
The upgrade reflects improved hospital occupancy, growth in pharmacy and diagnostics, and visible margin expansion across all segments.
Q2: Is Apollo Hospitals a long-term buy?
Yes, given its diversified healthcare model, digital presence, and scalable asset strategy, it is seen as a long-term growth stock in the healthcare sector.
Q3: What makes Apollo’s HealthCo segment significant?
It includes Apollo 24|7 digital health services and pharmacy chains—both showing strong topline growth and operational turnaround.
Published on 3rd july
Publisher : SMITA
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