Apollo Hospitals Share Price Gains After Q2 Profit Beats Estimates

Apollo Hospitals Enterprises Ltd.'s share price rose over 6% on Thursday, after reporting a 59% jump in consolidated net profit for the second quarter of the current financial year, surpassing analysts' expectations.

The company posted a profit of Rs 395.7 crore for the quarter ending Sept. 30, 2024, according to a filing with the stock exchange on Wednesday. Analysts surveyed by Bloomberg had predicted a profit of Rs 367 crore.

Revenue from healthcare services rose 14% to Rs 2,903 crore, up from Rs 2,547.2 crore. Earnings before interest, taxes, depreciation, and amortisation, or Ebitda, also grew 14%, reaching Rs 722 crore with a margin of 24.87%. Profit from operations increased 16%, amounting to Rs 364.3 crore.

As of Sept. 30, Apollo Hospitals operated 7,994 beds across its network (excluding Apollo Health and Lifestyle Ltd. and managed beds), with the overall occupancy rate improving to 73% from 68%, driven by higher patient volumes.

“Earnings were driven by strong performance in healthcare services, pharmacy—both online and offline—as well as Apollo Health and Lifestyle," said Suneeta Reddy, managing director of Apollo Hospitals.

While there was some fluctuation in medical admission growth—last quarter company was at 10% volume growth, this quarter was 8%—Reddy remains positive. “The whole network is firing; therefore, we shall see continued growth in volumes.”

“Looking forward, we should expect stable margins, and yes, definitely there is an improvement on a consolidated basis. Going forward, we should only see it improve.”

Reddy said the company's profit after tax and enhanced performance is sustainable.

There was a substantial increase in occupancy rates in metro hospitals, especially in Chennai, Delhi, and Hyderabad, she said. “Metro hospitals’ occupancy is 20% higher. From here, growth will be a combination of case mix, with a 3% tariff increase that has also contributed to this improvement.”

• Revenue up 15% to Rs 5,589.3 crore (Bloomberg estimate: Rs 5,532 crore).

• Ebitda up 30% to Rs 815.5 crore (Bloomberg estimate: Rs 781 crore).

• Ebitda margin expands 170 basis points to 14.6% (Bloomberg estimate: 14.1%).

• Net profit up 59% to Rs 395.7 crore (Bloomberg estimate: Rs 367 crore).

Apollo Hospitals stock rose as much as 6.68% during the day to Rs 7,433.65 apiece on the NSE. It pared gains to trade 6.14% higher at Rs 7,395.65 apiece, compared to an 0.57% decline in the benchmark Nifty 50 as of 9:39 a.m. 

It has risen 44.14% in the last 12 months and 29.89% on a year-to-date basis. Total traded volume so far in the day stood at 26 times its 30-day average. The relative strength index was at 71.80.

Of the 28 analysts tracking the company, 22 have a 'buy' rating on the stock, four recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential downside of 0.7%.