HSBC has cut its target price on Apollo Hospitals to ₹8,130 from ₹8,730 per share, while maintaining a ‘Buy’ rating, citing solid revenue growth but ongoing cost pressures in its 24/7 platform.
Apollo Hospitals reported a 13% YoY rise in hospital revenue, driven by a pick-up in patient volumes and a better case mix. Additionally, other business segments grew in the mid-to-high teens, reflecting a broad-based growth trajectory.
However, a key focus remains Apollo’s 24/7 digital healthcare platform, which has been a drag on profitability. The management aims for cost breakeven in 24/7 within the next 3-4 quarters, aided by value-added services, including insurance integration.
Apollo continues to make progress in adding hospital beds under its Healthcare Services (HCS) division, and improving profitability for 24/7 remains a crucial aspect of the company’s strategy going forward. HSBC believes that while the long-term growth outlook remains strong, the near-term profitability of the 24/7 platform and execution on cost efficiency will be key to stock performance.
