Apollo Hospitals rises 3%; Kotak upgrades to 'Buy' from 'Add', raises TP

As per Kotak Institutional Equities the company's overall bed expansion over FY2025-27E is still much lower than almost all of its peers

Apollo Hospitals shares advanced 3.4 per cent in trade on Tuesday, logging an intraday high at Rs 7014.7 per cent. The stock gained after Kotak Institutional Equities upgraded the stock from 'Add' to 'Buy'.

 

Around 12:53 PM, Apollo Hospitals shares were up 2.91 per cent at Rs 6,979 per share on BSE. In comparison, the BSE Sensex was down 0.94 per cent at 76,345.85. The market capitalisation of the company stood at Rs 1,00,347.31 crore. The 52-week high of the stock was at Rs 7,545.1 per share and the 52-week low was at Rs 5,690.8 per share. 

 

The brokerage raised the target price on Apollo Hospitals to Rs 8,270 per share as compared to Rs 8,100 per share. It said that the company's overall bed expansion over FY2025-27E is still much lower than almost all of its peers. 

 

"While the Street is incrementally worried about APHS’ high greenfield skew of 70 per cent in its FY2025-27E bed expansion plan, we note APHS’ overall bed expansion over FY2025-27E is still much lower than almost all of its peers, thereby exposing it to lower execution slip-ups," said Kotak Institutional Equities. 

 

In addition, analysts at Kotak believe Apollo Hospitals is better placed on the competitive front given its diversified presence and lower exposure to the three potentially hyper-competitive micro-markets of Delhi NCR.  

 

"As higher profitability in mature hospitals are partially offset by new beds (1,737-bed additions in FY2026E), we build in 60 basis points (bps) expansion in hospital Earnings before interest, tax, depreciation, and amortisation (Ebitda) margins to 24.7 per cent over FY2025-27E. Led by higher occupancies in the existing hospitals and steady scale-up in FY2027E of the new hospitals to be opened in FY2026E," the report read. 

 

Apollo Hospitals is one of the largest healthcare providers in India and is part of the Apollo Group, which operates across various sectors, including healthcare, pharmaceuticals, and diagnostics. Established in 1983 by Dr. Prathap C. Reddy in Chennai, Apollo Hospitals has grown to become a leading name in the healthcare industry in India and internationally.

 

In the past one year, Apollo Hospitals shares have gained 10 per cent against Sensex's rise of 9.5 per cent.