Apollo hospitals stock jumps to a record high after analysts raise targets

Shares of Apollo Hospitals Enterprise Ltd. jumped to a record high after analysts hiked price targets on the company, citing, among others, cost cuts and a recovery in volumes and margin.

India’s largest hospital chain operator, in a conference call with analysts after the third-quarter results, said it will return to normal growth rates from FY22, and is targeting Rs 500-crore revenue from the diagnostic business over the next two to three years.

The company hopes to close FY21 with operating margin of 6.5-6.6% and touch the 7% mark in FY22. After acquiring the balance 50% stake in Apollo Gleneagles Hospitals, Kolkata, the way Apollo Hospitals is thinking of growth is definitely a focus on existing assets and improving asset utilisation, Managing Director Suneeta Reddy said on the call. “We have not really looked at greenfield. We are not looking at greenfield but also looking at revenue share options. So its an asset-light growth strategy.”

According to Reddy, there is a potential to reach Rs 1,000-crore revenue from the preventive health business itself in the next 36 months.

Shares of Apollo Hospitals gained as much as 10%—the most in 10 months—to Rs 3,022 apiece around noon on Monday. Of the 22 analysts tracking the company, 17 have a ‘buy’ rating, three suggest a ‘hold’ and two recommend a ‘sell’, according to Bloomberg data. The stock is trading 6% higher than its 12-month consensus price target of Rs2,733.9 apiece.

Bloomberg Quint