Apollo’s hospitals biz to drive growth, but cost pressures may rise
₹4,418 crore. Apollo’s mainstay hospitals business saw 13% growth. The other segme-nts, Apollo Health and Lifestyle Ltd (AHLL) and Apollo HealthCo continued to improve.
But there is some disappointment. For one, the hospitals segment’s occupancy was lower, down from 64% in Q4FY23 to 62% in Q1. While this was mainly on account of seasonality, it needs to be monitored.
Overall Ebitda margin fell to 11.5% from 12.9% in Q1FY23. This is due to lower occupancy and higher operating costs in the hospitals segment on account of hiring new doctors and higher marketing expenses. The company has planned multiple business expansions across its segments including hospitals and diagnostics.
According to Kunal Randeria, director, Nuvama Institutional Equities, “The operating costs are expected to increase in coming quarters considering expansion planned. While operating leverage is expected to help to an extent, sustaining margin at FY23 levels may not be easy." That said, there are a few levers in place which could aid revenue growth and, in turn, support margin. In the hospitals segment, the management has planned 2,000-bed expansion for the next three years, particularly across markets like Bengaluru and Kolkata.
This is expected to aid occupancy. The management targets an occup-ancy of 70% in hospitals business. Apollo has effected tariff revisions in the hospitals segment, which would aid margin improvement ahead.
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