Akhileshwar Krishnan, group CFO of Apollo Hospitals, expects to achieve break-even during the September quarter. The company, which has allocated close to 2,250 beds for Covid patients, has treated over 22,000 already. Besides hospital beds, it is providing home-care plans and has tied up with corporates to treat employees quarantined in hotels. While analysts expect the hospital business to take some time to recover (normalisation by March’21 quarter), the fast-growing pharmacy business will support earnings.
Profitability, too, may expand, with increase in private-label products (own brands).
Investors will also keep an eye out for Apollo’s venture into digital consultation, with the launch of its Apollo 24x7 app.
The app has seen 3.72 million downloads (fastest among peers). The move will increase referrals for Apollo’s hospitals, and increase sales for its pharmacies and diagnostic services. Apollo holds inherent benefits, with its existing business supporting the venture. It has close to 4,000 pharmacies, which could help ensure faster delivery.
Analysts say its strength in the e-pharmacy business, which can be scaled up fast, is helping Apollo stay ahead of competitors (faster market share gains). Apollo, being a trusted brand with a vast network of doctors, holds the advantage.
Digital consultations could benefit from the company’s diagnostic services. Credit Suisse
had valued Apollo 24x7 at $325 million, with an Ebitda potential of $21 million by FY24.
The model is scalable, says the bank, citing the example of Chinese app Good Doctor, which has a market
capitalisation of over $16 billion.
With the management prioritising cost reduction, Krishnan expects net debt to remain stable at Rs 3,000 crore.
Bhavesh Gandhi of YES Securities says the impact in Q1 was anticipated, and recovery will begin now. However, after strong run-ups, investors would be better off accumulating the stock on dips.