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Apollo Hospitals (APHS)
Pharmaceuticals
30% PAT growth, yet again. PAT at Rs513 mn was in line with our estimate with (1)
sales growth of 22% despite muted performance at the Chennai cluster and EBITDA
margin of 16.5%, in line with our estimate. We increase our FY2012-13E consolidated
estimate by 6-3% due to higher other income and believe operating performance will
likely improve with (1) healthcare services growth expected to pick up to >20% from
18% in 1QFY12 which was affected by muted growth at Chennai (30% of
consolidated sales), (2) pharmacies sustaining 36% growth with positive EBITDA and
(3) improving operating performance in new hospitals ( around 1,000 beds added in the
past 18 months). Maintain BUY with PT at Rs565 (unchanged), 12X FY2013E EBITDA
1QFY12 total income at Rs6.4 bn, in line with our estimates
Total income grew 22% yoy to Rs6.4 bn in 1QFY12, largely in line with our estimates led by (1)
sustained performance in SAP which reported 36% sales growth, in line with FY2011 sales growth
and (2) 18% growth in healthcare services, however, down qoq due to poor patient volume at
Chennai. The quarter witnessed improving operating performance driven by (1) significant increase
in ARPOB across all hospitals on account of improving case mix and pricing increase, (2)
improvement in occupancy ratios in Hyderabad on increased bed capacity and in JVs and (3)
reduction in length of stay in Chennai and Hyderabad. We expect sales growth to pick up as
occupancies improve in new hospitals. Apollo added 1,000 beds and around 500 operational beds
in the past 18 months across Hyderabad, Bhubaneswar and Secunderabad.
EBITDA margin in 1QFY12 at 16.5%, down 130 bps yoy
EBITDA margin of 16.5% in 1QFY12 was down 40 bps yoy, 20 bps higher than our estimate,
however, down 130 bps yoy. We believe the reported margin of 16.5% adjusted for the impact at
Chennai which is an established high-margin cluster would have been at least 50 bps higher.
Maintain BUY with PT at Rs565 (unchanged)
We increase our FY2012-13E consolidates estimate by 6-3% due to higher other income with our
operational assumptions intact. We factor in 16-16.7% margin in FY2012-13E with overall sales
growth at 25% and 20%, respectively. Although there will be no significant addition to beds in
the next 15 months, we expect strong sales growth reported in FY2011 to continue on account of
(1) maturity of newly opened hospital beds and (2) improving profitability in SAP and JV/subsidiary
hospitals. Apollo trades at 13X FY2012E EBITDA. We value Apollo at Rs565, 12X FY2013E EBITD
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Apollo Hospitals (APHS)
Pharmaceuticals
30% PAT growth, yet again. PAT at Rs513 mn was in line with our estimate with (1)
sales growth of 22% despite muted performance at the Chennai cluster and EBITDA
margin of 16.5%, in line with our estimate. We increase our FY2012-13E consolidated
estimate by 6-3% due to higher other income and believe operating performance will
likely improve with (1) healthcare services growth expected to pick up to >20% from
18% in 1QFY12 which was affected by muted growth at Chennai (30% of
consolidated sales), (2) pharmacies sustaining 36% growth with positive EBITDA and
(3) improving operating performance in new hospitals ( around 1,000 beds added in the
past 18 months). Maintain BUY with PT at Rs565 (unchanged), 12X FY2013E EBITDA
1QFY12 total income at Rs6.4 bn, in line with our estimates
Total income grew 22% yoy to Rs6.4 bn in 1QFY12, largely in line with our estimates led by (1)
sustained performance in SAP which reported 36% sales growth, in line with FY2011 sales growth
and (2) 18% growth in healthcare services, however, down qoq due to poor patient volume at
Chennai. The quarter witnessed improving operating performance driven by (1) significant increase
in ARPOB across all hospitals on account of improving case mix and pricing increase, (2)
improvement in occupancy ratios in Hyderabad on increased bed capacity and in JVs and (3)
reduction in length of stay in Chennai and Hyderabad. We expect sales growth to pick up as
occupancies improve in new hospitals. Apollo added 1,000 beds and around 500 operational beds
in the past 18 months across Hyderabad, Bhubaneswar and Secunderabad.
EBITDA margin in 1QFY12 at 16.5%, down 130 bps yoy
EBITDA margin of 16.5% in 1QFY12 was down 40 bps yoy, 20 bps higher than our estimate,
however, down 130 bps yoy. We believe the reported margin of 16.5% adjusted for the impact at
Chennai which is an established high-margin cluster would have been at least 50 bps higher.
Maintain BUY with PT at Rs565 (unchanged)
We increase our FY2012-13E consolidates estimate by 6-3% due to higher other income with our
operational assumptions intact. We factor in 16-16.7% margin in FY2012-13E with overall sales
growth at 25% and 20%, respectively. Although there will be no significant addition to beds in
the next 15 months, we expect strong sales growth reported in FY2011 to continue on account of
(1) maturity of newly opened hospital beds and (2) improving profitability in SAP and JV/subsidiary
hospitals. Apollo trades at 13X FY2012E EBITDA. We value Apollo at Rs565, 12X FY2013E EBITD
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