Stock Pitch Presentation of Apollo Hospitals

1. APOLLO HOSPITAL: STOCK PITCH - HOLD

2. SNAPSHOT
• Occupancy Rate has remained high despite bed additions in the past years and the same is expected to
grow consistently further
• Average Revenue per occupied bed has grown at a healthy CAGR Of 8.7% over the last 8 years and such a
growth is expected in the coming years as well
• Pharmacies : Offers a wide range of medicines and surgical products, hospital consumables and over-the-
counter products. Own brand private labels (FMCG & OTC drugs) constitutes over 6% of FY16 turnover.
Target to increase to 20% in next 5 years
• Apollo Hospitals is widely recognized as the pioneer of private healthcare in India, and was the country’s
first corporate hospital. The Apollo Hospitals Group, which started as a 150-bed hospital and today,
operates 9215 beds across 64 hospitals.
• A forerunner in integrated healthcare, Apollo has a robust presence across the healthcare spectrum. The
Group has emerged as the foremost integrated healthcare provider in Asia, with mature group
companies that specialize in insurance, pharmacy, consultancy, clinics and many such key touch points of
the ecosystem
• It has recently acquired a South Chain of Pharmacy and are looking to expand through more such
acquisitions and thus looking forward toward an integrated approach.
• The PAT has grown at a CAGR of 32% and the EBITDA has been increasing at a CAGR of 22%
• It is looking to increase its operations by expanding into Tier 1 Cities and also improving the assets
optimally by improvement in technology and best practices.
Parameter Value(INR)
52 Week High/Low 1544.90/1195.00
Market Cap 189.55B
P/E 57.27
EPS 23.79
1 YEAR SHARE PRICE MOVEMENT
SHAREHOLDING Percentage
Promoters 34.4%
FIIs and FCBs 58.6%
Others 7%

3. INDUSTRY OVERVIEW
Hugely underpenetrated market with attractive dynamics
• Demand for healthcare services in
India is expected to rise owing to
favourable demographics. Private
sector players are well-positioned to
leverage this opportunity given low
contribution of government
spending.
70%
20%
10%
Indian Healthcare Delivery (FY2014)
Healthcare delivery Pharma Medical Technologies and Others
58
22
15
5
31
61
2
7
0
10
20
30
40
50
60
70
Government
Spending
Out of Pocket
Expenses
Private Prepaid
Expenses
Others
Health Care Expenditure Composition (%)
Global India
• Low public spending (31%) and limited
penetration of health insurance has
led to out-of-pocket expenditure
accounting for ~61% of total
healthcare spend
0
5
10
15
20
25
30
35
40
45
China US UK Global Brazil India
Beds per 10,000 people
• Healthcare infrastructure gap remains
substantial, with only 9 beds per
10,000 population, significantly lower
than the other countries and the
global median of 30 beds per 10,000
population
0%
5%
10%
15%
20%
25%
Disease
burden
Beds Doctors Nurses Community
and Health
Workers
Lab
technicians
India's share in World health parameters
• India’s share in global disease burden
is 20%, while its share of healthcare
infrastructure is much lower with only
6% of global hospital beds and 8%
share of doctors and nursing staffs

4. OTHER INDUSTRY TRENDS
Indian Health Services Market : In Patient CAGR(2014-15) 13% ; Out Patient CAGR(2014-15) 10%
• The number of middle/upper income households is expected to increase fourfold between 2010 and 2020
• Higher health insurance penetration allows greater access to quality healthcare (CAGR (2014-15) 30%)
Indian Medical Tourism
• The Indian medical tourism industry is expected to reach US$6bn
registering a 20% CAGR for the period FY12-18
• The total foreign medical tourist arrivals in India is expected to
increase almost 2.5 times from c.0.17mn in 2012 to c.0.4mn in 2018
• Growth in medical tourism expected primarily due to (i) quality
infrastructure (ii) highly skilled doctors; (iii) lower cost of treatment
and (iv) government policies (visas)
• Medical tourist from Asia Pacific region to continue to constitute
majority share. Contribution of MENA and Europe regions is
expected to increase going forward
Medical tourism is a burgeoning industry in India
3%
9%
41%
48%
Medical Tourists travel in
India(2012)
US Europe MENA Asia-Pacific
1%
16%
45%
37%
Medical Tourists travel in
India(2018E)
US Europe MENA Asia-Pacific

5. APOLLO: LAST SIX YEARS : A GLANCE
26054
31475
37687
43842
51785
60856
0
10000
20000
30000
40000
50000
60000
70000
2011 2012 2013 2014 2015 2016
Revenue(INRMillions)
FY
Revenue CAGR 18%
4190
5121
6082
6724
7347
7823
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2011 2012 2013 2014 2015 2016
EBITDA(INRMillions)
FY
EBITDA CAGR 13%
1839
2194
3044 3168
3399 3310
0
500
1000
1500
2000
2500
3000
3500
4000
2011 2012 2013 2014 2015 2016
PAT(INRMillions)
FY
PAT CAGR 12%
14.8
16.83
22.08 22.77
24.43 23.79
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016
BASICEPS(INR)
FY
BASIC EPS CAGR 10%

6. SERVICE EXCELLENCE DRIVING PROFITS
Apollo Service Excellence is the mintmark of Apollo made possible by an engaged workforce that takes pride in its TASCC (The
Apollo Standards of Clinical Care) day-to-day responsibilities.
The “Great Places to Work For” award that Apollo recently won stands testimony to that engagement.
HUMAN SIGMA
ADMISSIONS
GUEST RELATION
DISCHARGE
CARE
• 1st in India to adopt Human Sigma by mapping customer and employee engagement to the Gallup “S” Methodology
• Ranked this year among top 37 companies that partner with Gallup
• This recognises exceptional leadership that understands that engaging employees drives real business outcomes
• Apollo has adopted the engagement Pathway for Voice of customer (VOC)
• Partnered with Gallup to benchmark e-customer feedback with best in class
• In-house framework captures VOC from Interactions and converts them into Qualitative and quantitative feedback for
quick follow-up action
• Minimises waiting time for planned admissions
• Dedicated rooming experience that orients patients and attendees to various hospitals services
• Post-discharge calls to patients for suggestions and feedback 72 hour after discharge
• Speedy discharge summary for planned discharges
• Core training module for all nurses
• Inspires the conversion of daily interactions into memorable experiences, resulting in enhanced courtesy index for nursing
• Tender Loving Care (TLC) - Training for frontline staff

7. 457 2684
6621
20265
51785
60856
0
10000
20000
30000
40000
50000
60000
70000
1995 2000 2005 2010 2015 2016
Revenue(Rs.Millions)
FY
Revenue: CAGR 26%
750
1500
4000
7984
9215 9554
0
2000
4000
6000
8000
10000
12000
1995 2000 2005 2010 2015 2016
No.ofBeds
FY
OCCUPANCY
127
715
1167
3006
7347
7823
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1995 2000 2005 2010 2015 2016
EBITDA(InINRMillions)
FY
EBITDA CAGR 22%
63
278 384
1376
3399 3310
0
500
1000
1500
2000
2500
3000
3500
4000
1995 2000 2005 2010 2015 2016
PAT(INRMillions)
FY
PAT CAGR 32%
SUSTAINED GROWTH OVER THE YEARS

8. GROWTH STRATEGY FOR FUTURE
Cluster strategy or expansion with Greenfield projects in attractive newer markets
• By expanding into key existing clusters of Chennai, Bangalore, Hyderabad, Kolkata, Delhi and Ahmedabad
• Planned expansion in metros like Mumbai & large cities like Pune etc. with no existing presence – reaching to wider urban population
Grow laterally in high potential Tier II Cities
• Specialty care with integrated rehab at lower cost than Tier I
• Combination of Secondary and tertiary care anchored around CONECT
• Strong ICU focus combined with holistic medical care not available at nursing homes
• Given the growth forecast in Urban Rich and Urban middle class, focus is on selectively expanding into Tier II Urbanized cities
Increase Presence in Indian Healthcare Retail Space
• Increase in touch points with the patient to strengthen Apollo’s ability to be the premier healthcare provider for the community
• Increase the network of healthcare delivery formats - Clinics, Sugar Clinics, Cradle & Dialysis and Day Surgery centres through the Clinic subsidiary – AHLL
Cost Efficiencies and Focus on Improving Key Operating Metrics
• Optimised asset utilisations and minimum waste of all resources thorough standardised SOP’s and Lean Management
• Higher patient turnover by reducing average length of stay and optimised ward processes for faster turnaround time of all diagnostic process
• Improving average revenue per bed day through richer case mix

9. REVENUE MODEL
Revenue (Rs Million)
2016A 2017E 2018E 2019E 2020E 2021E
HEALTHCARE SERVICES
Total number of beds 9,554 10,069 10,584 11,099 11,543 12,005
Adjusted Discharges 533,598.00
Average length of stay (days) 4.17
Occupancy 0.64 0.68 0.68 0.68 0.68 0.68
Number of occupied beds 6,096.17 6,846.92 7,197.12 7,547.32 7,849.24 8,163.40
Average revenue per occupied bed per day 15,373.16 17,371.67 19,629.99 22,181.88 25,065.53 28,324.05
Revenue 34,206.87 43,413.98 51,566.97 61,106.03 71,812.05 84,395.49
PHARMACY SALES
Number of Pharmacy Stores 2,326 2,442 2,564 2,718 2,908 3,141
Revenue per Pharmacy Store 9.99 11.79 13.91 16.41 19.37 22.85
Revenue 23,236.95 28,787.04 35,665.76 44,613.36 56,323.79 71,787.26
Revenue from Healthcare Services 34,206.87 43,413.98 51,566.97 61,106.03 71,812.05 84,395.49
Revenue from Pharmacy Sales 23,236.95 28,787.04 35,665.76 44,613.36 56,323.79 71,787.26
Other Income 3,412.06 3,719.15 4,053.87 4,418.72 4,816.40 5,249.88
Total Revenue 60,855.88 75,920.17 91,286.59 110,138.10 132,952.24 161,432.63

10. 2016A 2017E 2018E 2019E 2020E 2021E
Income Statement (Rs Million)
Revenue from Operations 60,855.88 75,920.17 91,286.59 110,138.10 132,952.24 161,432.63
Cost of Materials Consumed 12,115.66 14,508.43 16,201.72 17,976.65 19,690.00 21,452.31
Cost of Stock in Trade 18,442.06 22,271.16 26,879.58 32,730.69 40,195.60 49,795.40
Gross Operating Income 30,298.16 39,140.58 48,205.29 59,430.75 73,066.64 90,184.91
Employee Benefit Expense 10,242.25 10,628.82 12,780.12 15,419.33 18,613.31 22,600.57
Other Expenses 12,233.02 13,049.64 14,812.94 16,925.81 19,397.48 22,440.67
Operating Income 7,822.89 15,462.11 20,612.23 27,085.61 35,055.84 45,143.68
Other Income
Interest Income 237.09 396.16 476.34 574.71 693.75 842.37
Income from Non-Operating Activities 29.82 0.00 0.00 0.00 0.00 0.00
Total Other Income 266.91 396.16 476.34 574.71 693.75 842.37
EBITDA 8,089.80 15,858.27 21,088.57 27,660.32 35,749.60 45,986.04
Depreciation 2,687.76 2,299.51 2,383.80 2,468.08 2,535.58 2,603.08
EBIT 5,402.04 13,558.76 18,704.77 25,192.23 33,214.01 43,382.96
Interest Expense 1,684.90 2,727.29 3,017.22 3,378.54 3,810.53 4,362.27
Profit before Exceptional Items and Tax 3,717.14 10,831.47 15,687.55 21,813.69 29,403.49 39,020.69
1,447.81 2,331.13 2,540.88 2,803.84 3,116.78 3,519.91
Exceptional Items -291.57 0.00 0.00 0.00 0.00 0.00
PBT 4,008.71 10,831.47 15,687.55 21,813.69 29,403.49 39,020.69
Income Taxes 1,002.18 3,748.77 5,429.46 7,549.72 10,176.55 13,505.06
Net Income 3,006.53 7,082.70 10,258.09 14,263.97 19,226.94 25,515.63
APPENDIX : NET INCOME PROJECTIONS

11. 2016A 2017E 2018E 2019E 2020E 2021E
Balance Sheet (Rs Million)
Assets
Non-Operating Cash and Equivalent 3,180.54 4,251.53 5,112.05 6,167.73 7,445.33 9,040.23
Operating Cash and Equivalent 795.14 1,062.88 1,278.01 1,541.93 1,861.33 2,260.06
Accounts Receivable 7,019.95 9,110.42 10,954.39 13,216.57 15,954.27 19,371.92
Current Investments 717.21 894.75 1,075.85 1,298.02 1,566.89 1,902.55
Inventories 4,432.79 5,275.65 6,268.78 7,506.85 9,054.88 11,002.45
Short Term Advances 5,969.15 7,592.02 9,585.09 12,115.19 15,289.51 19,371.92
Other Current Assets 486.47 543.71 653.76 788.76 952.15 1,156.11
Total Current Assets 22,601.25 28,730.96 34,927.93 42,635.07 52,124.35 64,105.23
Gross Fixed Assets 49,227.31 51,100.31 52,973.31 54,846.31 56,346.31 57,846.31
Less: Accumulated Depreciation 13,100.72 15,400.23 17,784.03 20,252.12 22,787.70 25,390.78
Net Fixed Assets 36,126.59 35,700.08 35,189.28 34,594.19 33,558.61 32,455.53
Capital WIP 5,955.75 7,971.62 9,585.09 11,564.50 13,959.99 16,950.43
Long Term Advances 7,953.40 9,922.19 11,930.46 14,394.21 17,375.85 21,098.02
Deferred Tax Asset 134.18 167.39 201.28 242.84 293.14 355.94
Non-Current Investments 1,980.25 2,686.72 3,230.51 3,897.64 4,705.00 5,712.89
Other Non-Current Assets 2,120.22 2,657.21 3,195.03 3,854.83 4,653.33 5,650.14
Total Non-Current Assets 12,188.05 15,433.50 18,557.28 22,389.53 27,027.32 32,816.99
Total Assets 76,871.64 87,836.16 98,259.58 111,183.29 126,670.27 146,328.17
Liabilities and Shareholders' Equity
Accounts Payable 5,037.17 6,252.53 7,323.82 8,620.25 10,180.55 12,112.11
Short-Term Debt 1,820.02 1,676.61 1,854.85 2,076.97 2,342.54 2,681.73
Other Current Liabilities 6,196.40 7,971.62 9,585.09 11,564.50 13,959.99 16,950.43
Total Current Liabilities 13,053.59 15,900.76 18,763.76 22,261.72 26,483.08 31,744.26
Long-Term Debt 22,956.37 26,266.89 29,059.27 32,539.27 36,699.77 42,013.71
Deferred Tax Liability 4,977.22 6,073.61 7,302.93 8,811.05 10,636.18 12,914.61
Other Non-Current Liabilities 44.72 108.27 130.19 157.07 189.61 230.23
Total Liabilities 41,031.90 48,349.54 55,256.14 63,769.11 74,008.63 86,902.81
Share Capital 695.63 695.63 691.97 683.75 674.97 665.60
Retained Earnings 33,840.90 37,487.78 40,870.65 45,162.10 50,256.71 56,837.88
Minority Interest 1,303.21 1,303.21 1,440.82 1,568.33 1,729.96 1,921.87
Total Shareholders' Equity 35,839.74 39,486.62 43,003.44 47,414.18 52,661.64 59,425.35
Total Liabilities and Equity 76,871.64 87,836.16 98,259.58 111,183.29 126,670.27 146,328.17
BALANCE SHEET

12. 0%
5%
10%
15%
20%
25%
30%
2016 2017E 2018E 2019E 2020E 2021E
EBITDA Margin
0%
10%
20%
30%
40%
50%
2016 2017E 2018E 2019E 2020E 2021E
RoE
Series 1
0%
5%
10%
15%
20%
2016 2017E 2018E 2019E 2020E 2021E
PAT Margin
PAT Margin
INCREASING MARGINS OVER FORECASTED YEARS