Apollo Hospitals


Well-known member
What are thoughts on this company, as it is planning to expand with a investment of 1000 crores?

300 financed from debentures and 300 from floating more shares, which means rights issue is on cards and dilution and fall in price of script.

Rest 400 will be sourced from internal accruals which means using the cash sitting on balance sheet.

So that means extensive leverage in coming months.

Do you think it is worth it? Seeing the long gestation period of business?

Especially they are betting on opening hospitals in rural districts which means lower margins?

The consolidated margin already is at 6%, what will happen post debt addition and lower margins?

Negative quarters in coming years?
They will most likely do a QIP, the rest will probably be funded with debt and internal accruals.

The margins are low because of the following:

1.High Labour costs.

2.The pharmacy business,which is currently in the investment phase is a drag on the overall margins.

3.Increasing interest costs.

4.Longer payback period owing to the huge initial costs (Real estate prices are sky high and Biomedical equipment is very expensive).

On the positives:

1.Good Management.

2.Their strong Brand presence will enable them to capitalize on the massive gap between demand and existing infrastructure.

3.Overseas Expansion.

4.Occupancy rates are around 75-80%, being an essential service this is unlikely to change.

5.Once the pharmacy business achieves critical mass, some stake could be sold to reduce the debt.

At this price, I don't think it's worth it.
Apollo hospitals down today on CLSA stake sale buzz.

Apollo Hospital under pressure on CLSA stake sale reports - The Economic Times

These panic sells are good opportunities to make quick profit. Last time I bought Yes Bank at 327 levels during a stake sale. And now it is at 440 levels within months.

Took a position at 788. Maybe will close today itself if I get a good price on exit. CLSA is selling at 824 levels. So expect 820 odd levels by close.


Staff member
The stock is fundamentally good but valuations at this level does not offer margin of safety.
Yes, I have the same opinion.

It's expensive at current price of 805.

Otherwise it's a good long term investment

- Healthcare has tremendous growth potential.
- The business is recession-proof.
- The business has the luxury of passing higher costs to customers.
Yes, I have the same opinion.

It's expensive at current price of 805.

Otherwise it's a good long term investment

- Healthcare has tremendous growth potential.
- The business is recession-proof.
- The business has the luxury of passing higher costs to customers.
What would be a fair price to enter?
What would be a fair price to enter?
Apart from the Hospital chain there are other things like retail pharmacy chain under the brand name "Apollo Pharmacy". They have close to 1400 stores all over India.

The retail chain has turned EBITDA positive (earning at the operating level) from this quarter. Once FDI in retail is approved, this chain may be hived off in a separate unit and 51% sold to foreign partner. They sell private labels and cosmetics apart from other fmcg products.

Moreover there is possibility of stake dilution in Apollo Health Street, their BPO unit. Also they hold stake in Apollo Munich Health Insurance

Looking at P/E may not be relevant since most businesses are still in investment phase. Once sufficient scale is reached be it in terms of no. of beds, or no of retail stores, it will be hard to replicate their first mover advantage.

Just think what would be the total cost of this business an what sort of an EV/EBITDA multiple this can command to a foreign buyer.

Around 600-640 would be a good level to start buying this. If all future plans fall in place this can become a 50,000 Cr market cap company over the next decade.
Apollo used to be one of the two stocks to play the hospital theme along with Fortis, but ever since the market downgraded Fortis on corporate governance issues, Apollo has traded at a wider premium, emerging as the front runner.

Added to this,t here is huge PE interest in this stock, so any corrections tend to be short lived and the stock quickly bounces back.

The stock is expensive and most likely will stay expensive,it's up to the buyer to take a call on what price is 'fair', obviously the lower the better.
Expect a strong rally in Apollo tomorrow morning

The Hindu : Business / Companies : Sutherland pips Genpact to buy Apollo Health Street

The U.S.-headquartered Sutherland Global Services, an international provider of business process and technology management services, has piped Genpact and others to the post to ink a Rs.1,000-crore all-cash deal to acquire Apollo Health Street Limited (AHS). An associate company of Apollo Hospitals Enterprises Ltd., AHS is a leading provider of healthcare business services and world-class health information technology (HIT)-based solutions.
This news was out before market opening today,check the BSE Announcement.

According to the management, Apollo Hospitals would receive Rs 210-220 Crores for their 38% holding in Apollo Health Street.

The deal values Apollo Health Street at an enterprise value of Rs 1000 Crores.
Thanks for the quick update.

Regarding Apollo, the more I read the more I am getting convinced of this as a long term play. One needs to be patient and keep adding slowly in small amounts.

Apollo Hospitals gears up for changing healthcare sector, goes for stargey change - Business Today