Apollo Hospitals Company Analysis

Ticker : 508869/APOLLOHOSP

ISIN : INE437A01024

Industry Analysis : Healthcare is one of the basic Need for human Race. There are many reasons we need healthcare with food and home. In stone age when there was no knowledge of illness, the life expectancy was low. After the development of medicine, humans realise that not only the medicine but also the atmosphere is also important and that is where the healthcare industry started. Ayurveda, one of the oldest medicinal system develop and with that healthcare also Developed.

India’s competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.

Today healthcare, comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment, is third fastest growing Sector in India after IT and telecommunication. Healthcare has become one of India’s largest sectors – both in terms of revenue and employment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.  Indian healthcare delivery system is categorised into two major components – public and private. The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and tier II cities.

Company analysis : Apollo Hospital, one of the leading Healthcare chain. The company owns 69 Hospital in which 9500+ Bed, 7000+ clinicians are available for taking care of the patients. 370000 appointmentin FY 16 in out of which 57000+ chemotherapy sitting and 160000 radiotherapy sitting. excellent service and availability of sophisticated medical equipment like PET are strength for the company.  The company is specialist in high end treatment for many organ specific operations like liver transplant. The company Also operating in gastrointestinal disorders and related services and also have pharmacy department. Though CRISIL Rates it AA, still there are some concerns and threats for business.

SHAREHOLDING :

Financial Performance and Ratio 

 2010-112011-122012-132013-142014-152015-16
Revenue2605.353147.533768.714384.225178.456085.59
Net Profit Margin7.798.249.318.567.546.82
Net Profit183.92219.35304.35316.75339.90331.01
EPS14.5717.1622.2223.7724.9126.55
Dividend per Share3.7545.505.755.756
ROE10.259.8111.3311.1510.9610.77
ROCE6.867.188.027.686.896.30
ROA5.756.147.096.805.955.40
Dividend Payout25.7323.2824.7524.1823.0822.59
Asset Turnover73.9074.5076.1979.5978.9179.09
Book value142.10174.93196.05213.10227.21246.55
Debt to Equity0.380.240.330.340.480.61

Investment Rational and future prospects :  India requires 600,000 to 700,000 additional beds over the next five to six years, indicative of an investment opportunity of US$ 25-30 billion. Given this demand for capital, the number of transactions in the healthcare space is expected to witness an increase in near future. The average investment size by private equity funds in healthcare chains has already increased to US$ 20-30 million from US$ 5-15 million. ( ibef.org)

The overall Indian healthcare market today is worth US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a Compound Annual Growth Rate (CAGR) of 22.9 per cent. Healthcare delivery, which includes hospitals, nursing homes and diagnostics centres, and pharmaceuticals, constitutes 65 per cent of the overall market. The Healthcare Information Technology (IT) market which is valued at US$ 1 billion currently is expected to grow 1.5 times by 2020

Today India is young economy. Average age of indan population is around 25. But as the growth Rate of population is coming down and very near to replacement rate that is 2.1. It mean that in future the Average age of population will grow. For that increased population of older people, healthcare is one of the basic Need. Apollo is one of the big name in the Sector. As it is one of the two biggest healthcare chain in India, its important to watch it. Though there is no diagnostic business attached here, but still the insurance business is important. It’s must to keep on RADAR. Big part of Expenditure is on facility and machinery. High attrition rate among the nursing is concerned about the company. Recent increase in debt is affecting the company. But future prospects is bright, its impossible to ignore the company.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter