Bed, Set, Go

Now that Apollo Hospitals’ aggressive capex is done, analysts believe it is time to buy the stock

Imagine, having hurt your leg and needing immediate medical care, your best option is a government hospital a few kilometres away. You begin to dread the hours-long wait for a doctor’s attention, which then may just be for a few minutes. Chances are several others with conditions worse than yours have already been waiting for longer. So, as you thank your stars for giving you private hospitals, you may as well thank Dr Prathap Reddy, founder of India’s first corporate or private hospital. 

After losing a patient who could not afford to go overseas for a bypass surgery in the ’70s, he realised the need for a multi-specialty hospital. That’s what led Reddy to found Apollo Hospitals in Chennai in 1983. Since then, it has grown to become the largest private healthcare service provider in the country, with nearly 10,167 beds across 70 hospitals (See: First mover advantage). It also operates India’s largest retail pharmacy chain apart from a network of primary clinics and a health insurance company. The nearest competitor, Narayana Health, operates across 23 healthcare facilities and approximately 7,100 beds. 

Harith Ahamed Analyst, Spark CapitalNaturally, Apollo’s stock has been on an upward trend over the past decade. From Rs.470 in March 2011, it has risen to Rs.1,680 in February 2020. After seeing some weakness in 2018, when it fell to Rs.920, the stock has rebounded on the back of improving operational performance. “Apollo Hospitals is coming off an aggressive capex cycle and is now poised for growth and improved profitability. Given their strength in execution and clinical expertise, we expect further improvements at hospitals added in recent years,” says Harith Ahamed, analyst, Spark Capital.


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