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Apollo Hospital: 6504: Sales Gr Long term: 17% | CY: 15% Q3_fy24 Result Update
(Strong sales growth was seen from the beginning of the year)
A chain which has maximum share in an organised hospital network with high growth both in Hospitals and Pharmacy stores.
It was in 1983 that Dr. Prathap Reddy made a pioneering endeavour by launching India's first corporate hospital - Apollo Hospitals in Chennai. Over the years, Apollo Hospitals has established itself as home to the largest cardiac practice in India with over 160,000 cardiac surgeries. Apollo Hospitals is also the world's largest private cancer care provider and runs the world's leading solid organ transplant program. As Asia's largest and most trusted healthcare group, its presence includes around 10000 beds across 70 Hospitals, wholesale pharmacy distribution both from store as well as doorstep delivery services to over 3,780 Pharmacies, over 200 Primary Care and Diagnostic Clinics, 148 plus Telemedicine Centres. We saw the Bed capacity growing from mere 750 to 10000 during the past 20 years and Pharmacy store growth with 28% CAGR during the past 20 Years.
ALOS (Average Length Of Stay) is around 4.19 Days | Bed Occupancy of 55% | ARPOB (Average Revenue Per Occupied Bed): 52214/Day
With revenue and profits of just 350 Cr and 24 Cr during the year 2002 today they are able to make revenue and profits of more than landmark figure 16000 Cr and have consistently made the profits during the whole 3 decades. High effective management. Revenue has grown by 35X. Majority of the hospitals have made losses during the same time but Apollo Hospital with consistent profits. But Profits are high volatile due to high debt of around 2700 Cr along with lease liability of 1600 Cr. Very smart business model as able to have balanced volumes from hospitals as well as Pharmacy. Investment of 1 Lakh is already around more than 75 Lakh since the last 20 Years along with consistent dividends. Apollo could have big benefit in the future as Industry grows further. Many people in this group are holding this company since decade around 200 and still there is no need to worry with awareness of high debt. Weightage in Portfolio should be given 1% considering high leadership in sales volumes but "debt" is the issue, hence should restrict around 1-2% weightage.
9M_fy24 Results: Revenue since the beginning of the year were strong. This even continues for Q3. Consolidated Revenues increased by 15% to Rs.14000 Cr in 9M_FY24 compared to Rs.12000 Cr in Q3FY23. Margin contracted by 90 bps. Hence Profits were down by 3%. Further this year we may see the sales growth of 15% and Profits may grow by 10%.
New buying can be done during any fall near 4652 while some profits can be booked during a rally near 8006. We may see 12% - 15% revenue growth this decade which can give us a multiyear rally and consistent profits. In spite of low margin no year we have seen they did losses shows high committed management.
Promoters hold around a low 30% stake and that also with 28% pledged (As we already know that in the Hospital chain there is high debt), 55% stake is with FPI & 9% with MF & Insurance companies. Just 4% with retail investors.
Disclosure: Document has been prepared for the education purposes and not be used as some recommendation or Tips.
