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Apollo Hospitals:: Result disappoints a bit…
Apollo Hospitals’ revenues grew 25% YoY to | 600.9 crore (I-direct
estimate: | 627.4 crore) with the hospital and pharmacy segment’s
revenue growing 22.8% and 30.4% YoY, respectively. The revenue
growth was lower than our expectations mainly due to the moderation
in growth of the pharmacy segment that accounts for nearly 28% of
topline) and single digit growth of 9.9% and 8.5% in in-patient volumes
in Chennai and Hyderabad, respectively. In contrast, the growth in
revenue per patient per bed (ARPOB) remained healthy and helped to
contain the margin contraction to some extent. As a result, operating
margins declined only 47 bps YoY to 15.7%. Interest costs continued to
remain higher on the back of higher debt. As a result, net profit grew by
only 4.3% YoY to | 45.8 crore and remained below our expectations (Idirect
estimate: | 50.2 crore).
Revenue grows moderately, remains below our expectations
During the quarter, operating revenues recorded growth of 25.0% YoY
and 2.5% QoQ, respectively. The growth remained lower due to the
moderation in growth of the pharmacy segment that accounts for nearly
28% of topline) and single digit growth of 9.9% and 8.5% in in-patient
volumes in Chennai and Hyderabad, respectively. Revenues from the
pharmacy segment grew only 30.5% YoY as against growth of 39.8%
YoY in the last quarter on account of moderation in growth of revenue
per store from 22% in the last quarter to 19% in Q3FY11.
Margin contraction, higher interest cost puts pressure on bottomline
During the quarter, interest cost increased 57.6% YoY due to the increase
in debt burden. As a result, PAT saw a growth of only 4.3% (I-direct
estimate: | 50.2 crore) despite a 25% YoY jump in net revenues.
Valuations
At the CMP of | 455, the stock is trading at 16.8x and 14.1x its FY11E and
FY12E EV/EBITDA, respectively. Considering the lower than expected
Q3FY11 result, we have downgraded our FY11E and FY12E EPS estimates
by 4.8% and 5.0%, respectively. However, strong company fundamentals
and a healthy sector outlook support our positive view on the company.
We continue to value the stock at 16.5x FY12E EV/EBITDA and have
arrived at a revised target price of | 545 with BUY rating on the stock.
Pharmacy division reports negative EBIT
During the quarter, the pharmacy segment reported negative EBIT of | 86
lakh as against positive EBIT of | 57 lakh reported in the last quarter.
Overall, net revenues in this segment grew 30.5% YoY to | 173.4 crore.
There has been a net addition of 32 pharmacy outlets during the quarter.
With the fluctuation in EBIT margins, we believe the sustainable
operational turnaround of the pharmacy business remains a key challenge
for the company in the medium-term.
Performance of associate/JVs continues to remain subdued
The performance of Apollo Health Street and Apollo Munich continued to
remain subdued at the operating level. Apollo Health Street reported a
22.8% YoY decline in operating profits led by a subdued topline and
higher interest burden. On the other hand, though Apollo Munich
reported strong topline growth, its operating loss for the quarter
remained the same as that of last year.
Key developments
The company has added over 900 beds in the past year. The locations in
which these hospitals have been added include Kolkata, Karur,
Bhubaneshwar, Hyderabad, Karaikudi, Secunderabad and Lavasa.
During the quarter, 32 new pharmacy outlets have been added. With this
addition, the total number of outlets has increased to 1,142.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Apollo Hospitals:: Result disappoints a bit…
Apollo Hospitals’ revenues grew 25% YoY to | 600.9 crore (I-direct
estimate: | 627.4 crore) with the hospital and pharmacy segment’s
revenue growing 22.8% and 30.4% YoY, respectively. The revenue
growth was lower than our expectations mainly due to the moderation
in growth of the pharmacy segment that accounts for nearly 28% of
topline) and single digit growth of 9.9% and 8.5% in in-patient volumes
in Chennai and Hyderabad, respectively. In contrast, the growth in
revenue per patient per bed (ARPOB) remained healthy and helped to
contain the margin contraction to some extent. As a result, operating
margins declined only 47 bps YoY to 15.7%. Interest costs continued to
remain higher on the back of higher debt. As a result, net profit grew by
only 4.3% YoY to | 45.8 crore and remained below our expectations (Idirect
estimate: | 50.2 crore).
Revenue grows moderately, remains below our expectations
During the quarter, operating revenues recorded growth of 25.0% YoY
and 2.5% QoQ, respectively. The growth remained lower due to the
moderation in growth of the pharmacy segment that accounts for nearly
28% of topline) and single digit growth of 9.9% and 8.5% in in-patient
volumes in Chennai and Hyderabad, respectively. Revenues from the
pharmacy segment grew only 30.5% YoY as against growth of 39.8%
YoY in the last quarter on account of moderation in growth of revenue
per store from 22% in the last quarter to 19% in Q3FY11.
Margin contraction, higher interest cost puts pressure on bottomline
During the quarter, interest cost increased 57.6% YoY due to the increase
in debt burden. As a result, PAT saw a growth of only 4.3% (I-direct
estimate: | 50.2 crore) despite a 25% YoY jump in net revenues.
Valuations
At the CMP of | 455, the stock is trading at 16.8x and 14.1x its FY11E and
FY12E EV/EBITDA, respectively. Considering the lower than expected
Q3FY11 result, we have downgraded our FY11E and FY12E EPS estimates
by 4.8% and 5.0%, respectively. However, strong company fundamentals
and a healthy sector outlook support our positive view on the company.
We continue to value the stock at 16.5x FY12E EV/EBITDA and have
arrived at a revised target price of | 545 with BUY rating on the stock.
Pharmacy division reports negative EBIT
During the quarter, the pharmacy segment reported negative EBIT of | 86
lakh as against positive EBIT of | 57 lakh reported in the last quarter.
Overall, net revenues in this segment grew 30.5% YoY to | 173.4 crore.
There has been a net addition of 32 pharmacy outlets during the quarter.
With the fluctuation in EBIT margins, we believe the sustainable
operational turnaround of the pharmacy business remains a key challenge
for the company in the medium-term.
Performance of associate/JVs continues to remain subdued
The performance of Apollo Health Street and Apollo Munich continued to
remain subdued at the operating level. Apollo Health Street reported a
22.8% YoY decline in operating profits led by a subdued topline and
higher interest burden. On the other hand, though Apollo Munich
reported strong topline growth, its operating loss for the quarter
remained the same as that of last year.
Key developments
The company has added over 900 beds in the past year. The locations in
which these hospitals have been added include Kolkata, Karur,
Bhubaneshwar, Hyderabad, Karaikudi, Secunderabad and Lavasa.
During the quarter, 32 new pharmacy outlets have been added. With this
addition, the total number of outlets has increased to 1,142.
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