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Robust performance continues…
Apollo Hospitals’ revenues grew 28.6% YoY to | 586.4 crore with the
hospital and pharmacy segment’s revenue growing 24.6% and 40.0%
YoY, respectively. The growth in revenues was higher than our
expectations due to healthy growth in patient volumes and rise in
revenue per bed (ARPOB). The operating margin also improved 97 bps
YoY and 11 bps QoQ to 17.0%. On the other hand, interest costs
continued to remain higher on account of higher debt. However, net
profit growth remained above our estimates on account of a better
operating performance. It increased by 45.5% YoY to | 49.6 crore (Idirect
estimate: | 41.4 crore).
Strong revenue growth backed by improved performance
During the quarter, operating revenues recorded growth of 28.6%
YoY and 12.1% QoQ, respectively. The growth has mainly been
driven by a rise in both inpatient (up 17.8% YoY) and outpatient
volumes (up 39.0% YoY) and increase in ARPOB (up 10.2% YoY).
Revenues from the pharmacy segment also grew 39.8% YoY to |
166.3 crore. This was led by a rise in pharmacy outlets (up 14.2%
YoY to 1110) and increase in realisation per outlet (up 22% YoY)
Net profit grows 45% YoY despite higher interest, depreciation
During the quarter, interest cost increased by 35% due to an
increase in debt. Despite this, the net profit for the quarter increased
by 45.5% to | 49.6 crore (I-direct estimate: | 41.4 crore) due to a
better operating performance.
Valuation
At the CMP of | 512, the stock is trading at 17.3x and 14.3x its FY11E and
FY12E EV/EBITDA, respectively. The company has constantly maintained
its growth trajectory in both the hospital and pharmacy segment.
However, a sustainable turnaround in the pharmacy business continues
to remain a challenge for the company. We continue to maintain our
target price of | 610, i.e. at 16.5x FY12E EV/EBITDA with BUY rating on
the stock.
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