Healthcare Stocks At Its Peak, Buy Apollo Hospitals Shares: Motilal Oswal Recommends

The pandemic has been the biggest reason behind the boom of the healthcare sector in the equity markets, for around two years. So, brokerage firm Motilal Oswal has recommended buying stocks of Apollo Hospitals with a potential upside of 25%, within a target period of 12 months.

Target Price

The Current Market Price (CMP) of Apollo Hospitals is Rs. 4706. The brokerage firm, Motilal Oswal Recommends has estimated a Target Price for the stock at Rs. 5900. Hence the stock is expected to give a 25% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 4706
Target Price	Rs. 5900
1 Year returns	25.00%

Company performance

Apollo Hospitals' EBITDA stood at Rs. 11374m in FY 21, while it is expected to grow to Rs. 22188m in FY 22. Adjusted PAT stood at Rs. 1125M in FY 21, while it is expected to grow at Rs. 9495m in FY 22. total income from operations of Apollo was at Rs. 1,05,600m in FY 21, while it is expected to reach Rs. 1,42,229m in FY 22. The brokerage firm is expecting 25% CAGR in Apollo's hospital revenues, driven by a 22% CAGR in mature hospitals (more than 9 years of operation) and 31% in new hospitals over FY21-24.

Comments by Motilal Oswal

Maintaining buy rating Motilal Oswal said, "Apollo's digital health platform's flagship offering, its e-pharmacy, has deep roots due to a 4,300 strong physical store presence. We expect the pharmacy distribution business to record a CAGR of 17% over FY21-24, on the back of same-store sales growth, higher private label penetration, and new store additions. Apollo's mature hospitals are already established centers of excellence that provide gold-standard care. Mature hospitals with ~5,300 operating beds and Rs. 35b in revenues (FY21) grew at a 4% CAGR over FY13-21."

About the company

Apollo Hospitals is India's leading hospital chain with 71 owned and operated hospitals, 10,000+ bed capacity, and 7,800+ operating beds. It has an established presence in southern India with 4,300+ operating beds in this region. Multiple growth levers are playing for the growth of Apollo, as they are offering all healthcare services under one roof.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: Motilal Oswal Recommends Buying This Consumer Product Stock For 29% Upside, In 1 Year)