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Case Study-Apollo Hosp
Case Study-Apollo Hosp
Case Study-Apollo Hosp
DHDHospital Enterprise Ltd (AHEL) is one of the leading integrated healthcare service providers in Asia. It has a presence in
Apollo
hospital, pharmaceutical, primary care & diagnostic clinics. It also has telemedicine units across 10 countries, health insurance
services, global projects consultancy, colleges of nursing and hospital management and a research foundation, epidemiological studies,
stem cell & genetic research.
The company owns 71 hospitals, with total bed capacity of 10,231 beds as on 30th September, 2021. Of these, 44 hospitals are owned
including subsidiaries, JVs, and associates, with 8,858 beds; 5 managed hospitals with 851 beds. It also has 11 day-care/short surgical
stay centres with 244 beds, and 11 cradles with 278 beds.
Besides its hospital-based pharmacies, AHEL runs pharmacy operations under ‘Apollo Pharmacy’ through a retail pharmacy chain of
3,766 outlets. Apollo Healthcare and Lifestyle (AHLL) subsidiary covers the retail healthcare business of the Apollo group, comprising
Apollo Clinics, Apollo Sugar, White Dental, Apollo Day Surgery centres and Apollo Cradle.
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ABOUT
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SEGMENT WISE REVENUE MIX (FY21) SERVICES OFFERED BY THE COMPANY
DHD
6%
21%
48%
25%
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GROWTH
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GROWTH
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GROWTH
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GROWTH EDGE METER: 3
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
PROFITABILITY
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PROFITABILITY
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PROFITABILITY
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DHD ROCE
The ROCE in FY20 stood at 17.13% aided by higher
EBITDA, however, in FY21 it stood lower primarily
due to lower revenue and EBITDA on account of the
pandemic.
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DHD ROE
The return on equity in FY20 was also substantially
higher at ~13% on account of higher net profits
(aided by exceptional gain worth ₹199 cr), however
in FY21, it was lower due to decline in the net profits.
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PROFITABILITY EDGE METER: 3
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
EFFICIENCY
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EFFICIENCY
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WORKING
DHD CAPITAL CYCLE
Working capital cycle of the company has been
stable at around 21 days to 26 days until FY20,
however in it improved to ~14 days primarily due to
higher payable days and lower inventory days during
the year.
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EFFICIENCY
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ASSET
DHD TURNOVER RATIO
The asset turnover ratio in FY21 stood lower at
~0.85x, impacted due to lower revenue.
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EFFICIENCY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
SOLVENCY
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SOLVENCY
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INTEREST
DHD COVERAGE RATIO
Higher amount of debt resulted in higher interest
obligations for the company over the years.
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SOLVENCY
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SOLVENCY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
VALUATION
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DHD PE RATIO
AHEL is currently trading at a rich PE of 64.57x based
on TTM EPS.
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VALUATION
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VALUATION
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VALUATION EDGE METER: 2
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
QUALITY
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DHD MANAGEMENT
The management of Apollo hospitals has a mission to
make India self-reliant in healthcare by inculcating
superior care of international standards which could
be made available to common man.
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SHAREHOLDING
DHD PATTERN
The promoter shareholding stood at 29.33% as of
December 2021. The management has an aim to
bring down the pledged share component by ~50%
by the end of FY22.
LIC 3.69%
Veritas Funds Plc 2.66%
Touchstone strategic trust 2.59%
Schroder Int. Selection Fund 2.08%
Sands Capital Funds PLC 1.21%
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QUALITY
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QUALITY
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COMPETITIVE
DHD LANDSCAPE
Apollo Hospitals is one of the few listed hospital
services entities in India. The industry has become
highly competitive from the unorganized as well as
organized players.
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• Reorganization of the digital offering: The company announced a reorganization of its business, with Pharmacy+ Digital platform
24/7 being put into a 100% subsidiary. This step would help the ‘Apollo 24/7’ brand to free up and pursue an independent strategy,
while enjoying the Apollo brand. It will also be looking towards capital raise for the growth of Apollo HealthCo business in the
medium term.
• Strengthening presence in the key markets: Apollo Hospitals aims to enhance its network in Tier II and Tier III cities. Apollo
Hospitals has already launched hospitals in several Tier 2 and Tier 3 locations to meet the demand in some of these areas. Reach
has also been enabled through the establishment of hundreds of tele-medicine centers across the length and breadth of the
country. This has helped augment the Apollo Hospitals brand image as a pan India player. Apollo Hospitals’ healthcare centers in
Tier II and Tier III cities will be set up at a considerably lower capital cost per hospital bed as compared to a Tier I city.
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The company is currently focusing more on the diagnostics business, hence it expects an improvement in the revenue and
profitability from the diagnostic clinic business. It would be adding ~200 diagnostic centers and expects the total to reach ~2,000
centers in the next 2 years (currently at 985 centers). The margins are expected to reach ~15% in the next 2-3 quarters from the
current 11% levels, which would be aided due to an increase in the volumes.
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QUALITY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
FINAL
ABOUTEDGE
THE MATRIX
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DHD
Edge Meter Aspects Grade
Growth 3
Profitability 3
Efficiency 4
Solvency 4
Valuation 2
Quality 4
TOTAL 20
The maximum grade for a company could be 30. Any company above grade 20
is worth considering. A grade below 15 is considered to be poor.
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DHD
THANK YOU
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equity involves individual judgements, this analysis should be used for only learning enhancements and cannot be considered to
be a recommendation on any stock or sector. Our knowledge team has limited understanding and we all are learning the art and
science behind this.
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DISCLOSURES
DHD
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the month immediately preceding the date of publication of the research report or date of the public appearance.
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