Apollo Hospitals posted good growth in Sales and PAT with slightly dip in margins during the quarter. The Company Standalone Sales grew by 18% YoY in Q4'FY14 to Rs 998.18 crore on the back of robust growth in Pharmacy business (28%) coupled with good growth from Hospitals (13%). However, Operating Profit Margins down by 60 bps YoY to 15% and accordingly Operating profit grew by 13% YoY to Rs 150.05 crore. After the sharp rise in other income (54%) coupled with marginal increase in Interest cost (1%) despite higher depreciation (15%) and effective tax rate (up by 200 bps YoY to 21%) PAT grew by 15% YoY to Rs 81.34 crore.
- Good Growth in Sales, Margins Slightly Dip:
The Standalone Sales grew by 18% YoY to Rs 998.18 crore for the quarter ended March 2014 on the back of robust growth in Pharmacy business (28%) coupled with good growth from Hospitals (13%). The Operating Profit Margins down by 60 bps YoY to 15% on the back of higher Selling & Distribution costs (up by 40 bps YoY), Staff cost (up by 30 bps YoY) and consumption cost (up by 40 bps YoY) despite the decline in Other expenditure (down by 20 bps YoY) as percentage to sales and net of stock adjustments. Consequently, Operating Profit grew by 13% YoY to Rs 150.05 crore. After the 54% growth in other income to Rs 7.03 crore EBIDTA grew by 14% YoY to Rs 157.08 crore.
- PAT grew by 15%:
The interest cost marginal increased by 1% YoY to Rs 20.94 crore. However, depreciation was up by 17% YoY to Rs 136.14 crore. Eventually, PBT was up by 17% YoY to Rs 103.02 crore. Further, with the higher effective tax rate (up by 200 bps YoY to 21%) PAT grew by 15% YoY to Rs 81.34 crore.
- Revenue Mix – Hospitals grew by 13%, Pharmacy grew by 28%:
The Revenues from Hospitals business (63% of sales) grew by 13% YoY to Rs 633.4 crore for the quarter ended March 2014. However, segment margins down by 70 bps YoY to 16.9% and accordingly Segment Profit grew by 8% YoY to Rs 107.24 crore. Notably, the Revenues from the Pharmacy business grew by strong 28% YoY to Rs 364.85 crore for the quarter ended March 2014. Also, Segment margins expanded by 100 bps YoY to 2.7% and accordingly segment profit grew by 99% YoY to Rs 9.69 crore for the same period.
- Bed Capacity@8617 beds, Pharmacy stores net additions@ 46 stores:
It has 50 hospitals with total bed capacity of 8617 beds as on Mar 31st 2014. The 39 owned hospitals including JVs/ Subsidiaries and associates with 6684 beds and 11 Managed hospitals with 1933 beds. Of the 6684 owned beds, 5811beds were operational and had occupancy of 71%. The Company Plans to add 12 more hospitals from the current 39, and 2175 beds to the current 6684 beds by FY'17. The Total estimated Capex for this Rs 2100.2 crore out of this AHEL share is Rs 2032.7 crore, and out of this Apollo has already invested Rs 590.1 crore as on 31st March 2014. During the quarter, it added 71 Pharmacy stores and closed 25 stores for a net addition of 46 stores. The total store network stands at 1632 operational stores as of March 31st 2014.
Standalone Yearly Performance:
The Sales grew by 16% YoY to Rs 3861.63 crore for the year ended March 2014. However, OPM fell by 80 bps YoY to 15.9% and after this Operating Profit grew by 11% YoY to Rs 613.86 crore. After the 28% fall in other income to Rs 22.46 crore EBIDTA grew by 9% YoY to Rs 636.32 crore. With the higher interest cost (up by 20% YoY to Rs 87.07 crore) and depreciation (up by 19% YoY to Rs 129.08 crore), PBT grew by moderate 4% YoY to Rs 420.17 crore. Thanks to the sharp fall in effective tax rate (down by 320 bps YoY to 21.3%) PAT grew by moderate 9% YoY to Rs 330.72 crore.
Standalone Hospitals Cluster wise Performance for the year ended March 2014:
The Hospitals grew by 13% for the year ended March 2014 on the back of good growth in outpatient volumes (7%) coupled with good growth from inpatient volumes (6%). The no of Operating bed increased to 5811 in FY14 compared to 5549 in FY13. Also, The ARPOB grew by 9% to Rs 23684 for the same period. However, Occupancy decreased to 71% during the year compared to 72% in the corresponding previous period. This is due to the new additions but the absolute occupancies have increased. Notably, the ALOS declined to 4.54 days compared to 4.65 days in the previous previous period.
- Chennai Cluster:
The total net revenues grew by 11% YoY to Rs 1108.9 crore for year ended March 2014 on the back of good growth from Inpatient revenues (up by 10% YoY to Rs 837.2 crore) coupled with robust Outpatient revenues (up by 13% YoY to Rs 271.7 crore). The inpatient volume growth was 5% and outpatient volume growth was 7% during the year. Notably, the Number of operating beds increased to 1264 beds (as against 1237 beds), Where as the Occupancy has declined to 72% (compared to 74%), but ARPOB (Rs/day) increased to Rs 33561 (up by 11%, as against Rs 30174) for the same period.
- Hyderabad Cluster:
The Total net revenues grew by 11% YoY to Rs 458.2 crore for the year ended March 2014 on the back of robust outpatient revenue growth (up by 15% YoY to Rs 82 crore) coupled with good growth in inpatient revenues (11% YoY to Rs 376.3 crore). The volume growth was moderate as the Inpatient volumes were at 3% and outpatient volumes were at 6% during the year. Notably, the Operating beds remained at 930 beds, whereas Occupancy is improved 67% (as against 66%), ARPOB improved to Rs 2000.2 (as against Rs 18280) ALOS slightly declined to at 4.49 days (as against 4.55 days) for the same period.
- Other and Significant Subs/Jvs/Associates:
The total net revenues from the Subs/Jvs/Associates grew by 11% YoY to Rs 1413.7 crore for the year ended March 2014 on the back of good growth inpatient revenues (10%) coupled with strong growth from outpatient revenues (17%). Also, the total net revenues from the others grew by strong 24% YoY to Rs 538.3 crore for the year ended March 2014 on the back of robust growth from the inpatient revenues (10%) and outpatient revenues (17%).
Consolidated Yearly Performance:
The Sales grew by 16% YoY to Rs 4384.22 crore for the year ended March 2014. However, OPM down by 80 bps YoY to 15.3% and accordingly Operating profit grew by 11% YoY to Rs 672.41 crore. After the 29% fall in other income EBIDTA grew by 9% YoY to Rs 693.88 crore. With the 16% increase in interest cost to Rs 119.38 crore and 18% rise in depreciation to Rs 167.79 crore, PBT grew by 4% YoY to Rs 406.71 crore. Thanks to the fall in effective tax rate (down by 170 bps YoY to 25%) PAT grew by 6% YoY to Rs 304.95 crore. After adjusting for EO gain Rs 6.29 crore in the corresponding previous period, PAT after EO grew by 4% YoY to Rs 304.95 crore. After accounting to the Minority interest Rs 1.37 crore (down by 17%) and profit from associates Rs 10.43 crore (up by 21%) net profit grew by same 4% YoY to Rs 316.75 crore.
Valuation:
- The scrip is hovering at Rs 910.55 at BSE, India on 30th May 2014 and currently trading 42 times the Consolidated FY'14 EPS Rs 21.9.
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