This Hospital Stock Gave 286% In 5 Years, Motilal Oswal Rates As Top Pick For 2023, Recommends Buy

Motilal Oswal has a buy on Apollo Hospitals Enterprise Ltd. with a target price of Rs 5,600/share for the stock. The brokerage with the estimated target price claims a potential upside of up to 30% from its current level. Established in 1983, Apollo Hospitals is a leading Hospital & allied sector company having a market capitalisation of Rs 62,086.21 crore. The company has a robust presence across the healthcare ecosystem, including Pharmacies, Hospitals, Primary Care & Diagnostic Clinics and several Retail Health models.

Stock Outlook & Performance

The stock of Apollo Hospitals is currently trading at Rs 4,319.20/share on NSE. Today, it opened at Rs 4,337/share, currently trading 0.08% down from its previous close of Rs 4,322.85/share. It recorded the 52-week high on 14 March 2022 at Rs 5,016.55/share and the 52-week low on 26 May 2022 at Rs 3,361.55/share, respectively.

The stock fell 5.376% in the past 1 month, and 6.41% in the past 1 year, respectively. Whereas the stock has given robust 166.89% positive return in the past 3 years, and 286.94% in the past 5 years, respectively.

Past was good; await better future

APHS has delivered a phenomenal performance (3.6x earnings) over the past five years, reporting a 24% EBITDA CAGR and reducing net debt by half, benefiting from a lower tax rate. Accordingly, the stock price has appreciated 3.6x in the same period. Interestingly, over FY23-25E, the outlook on operational parameters for healthcare services also remains promising (17% EBITDA CAGR) on the back of superior execution of APHS and favorable macro factors. The pharmacy outlook is encouraging, too, with the aggressive expansion of offline/online infrastructure and the ability of APHS to provide the entire spectrum of healthcare services to its customers.

Buy for a target price of Rs 5,600/share

The Brokerage said, "We have a BUY rating on APHS with a price target of INR5,600 valued on the SOTP basis (23x EV/EBITDA for hospital business, 16x EV/EBITDA for back-end pharmacy, 22x EV/EBITDA for front-end pharmacy, 30x EV/EBITDA for Apollo Health and Lifestyle (AHLL), and 4x EV/sales for Apollo 24/7)."

 

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.