SlideShare ist ein Scribd-Unternehmen logo
1 von 15
Investment Analysis
Apollo Hospital
BY:
ANAKSHI DHAMA
DEEPAN LOGANATHAN
SINJANA GHOSH
BUY INR 939.58
Macro Economic Analysis Of The Indian Health Care Sector
▪ Valued at US$79 billion in 2012 and is expected to reach US$ 158 billion by 2017.
▪ Driving growth factors are:
▪ rising population, increasing disposable income, increasing lifestyle related health issues,
changing patent laws , cheaper treatment costs, medical tourism, improving health insurance
penetration, government initiatives and focus on public private partnership (PPP) models
▪ Shares of private sector in health care industry is expected to increase from 66%(2005) to
81%(2015)
▪ The Indian pharmaceutical industry grew from $0.8 billion in 1980 to $21.73 billion in 2010 and is
expected to grow further.
▪ Branded generics are expected to become more prevalent in India as many global players are
planning to launch them after their patents expire.
▪ The Indian government has implemented various initiatives to increase insurance coverage and
reduce healthcare costs
Referencehttp://www.prnewswire.com, http://www.business-standard.com,
69%
12%
9%
7%
3%
Total healthcare revenues in the country
Hospitals
Pharmaceuticals
Medical equipment
&supplies
Medical Insurance
Diagnostics
Apollo Hospitals
▪ Largest hospital chains (50 hospitals including 14
managed) in India with aggressive expansion plans.
▪ Stable revenue stream with sustainable growth
▪ Pharmacy segment has started to contributing to profits
▪ One of the largest retail pharmacy chains in India
▪ Medical Tourism: a new growth factor
▪ Reference: http://content.indiainfoline.com
Apollo
Hospitals Pharmacy Insurance
Weighted Average Cost Of Capital
• Sensex
• Nifty
The market
• 10 yr Inflation (CPI): 7.0%
• No Sovereign risks
Macroeconomic
variables
• 10 yr treasury bonds
• better duration matching compared to short-term treasury bills,
and smaller beta and lower liquidity premium compared to
longer term (30-year) bonds
Choice of risk-
free rate
Weighted Average Cost Of Capital
Variable Value
Historical Levered Beta 0.6
Historical D/E 0.3
Tax rate 34%
10 yr T-Bill 8.05%
Default spread 2.00%
Risk free rate 6.05%
Market Risk Premium 3%
Ke 11.47
Kd post tax 7.7%
WACC 10.38%
Improving operating metrics and margin drivers
0
2000
4000
6000
8000
10000
12000
14000
16000 Total number of beds
Average number of
beds available during
the year
Series 3
Number of Beds
68%
69%
70%
71%
72%
73%
74%
75%
76%
77%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
BOR
BOR
Contd..
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
rate of growth of
finance cost
Net D/E
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Revenue/IN
patient
Total HC
revenue
Growth Rate
Overall performance with conservative
assumptions
0%
5%
10%
15%
20%
25%
2011 2012 2013 2014 2015 2016 2017 2018
EBITDA
EBIT
PBT
PAT
21%
21%
24%
30%
23%
25%
27%
27%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
PHARMACY
EBITDA
Segment contribution to EBITDA
Over 10% upside
▪ FCFE: Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
Valuation of Firm
▪ FCFF: FCFE – New Debt issued + current maturities of LT debt + (1-tax rate)*Debt
Sensitivity analysis
In Percentage
Cost of Equity
10 11 11.56 12 13
TerminalGrowthRate
2 775.33 771.04 768.7017 766.8978 762.9
3 850.8 846.5 844.1641 842.36 838.37
4 946.22 941.92 939.5795 937.7755 933.78
5 1070.7 1066.41 1064.067 890.29 1058.27
CMP: INR 851.75
Under stress
conditions
CRISIL assumptions for
growth
Valuation multiples
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Forward P/E
P/E multiple
Linear (P/E multiple)
0.0
0.5
1.0
1.5
2.0
2.5
2009 2010 2011 2012 2013 2014 2015 2016
PEG
PEG
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
EV/EBIDTA
EV/EBIDTA
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018
RoE
RoE
Risk Factor In The Overall Business
▪ Unavailability of skilled professionals might impact prospects: Unavailability of skilled
professionals or the inability to retain key doctors could impact future prospects.
▪ Rising real estate prices: Land and buildings together account for 40-45% of the total capital costs in setting
up a hospital. Rising real estate prices, especially in metros and tier I cities, are making it difficult to put up
commercially viable hospitals.
▪ Delay in addition of new beds: Over the next two-three years, Apollo is likely to add 3,000 beds at different
locations. More-than-expected delays or cost overruns may impact financials and, consequently, the valuations.
Reason Why Apollo Hospitals stock continue to remain buy
▪ Consistency in performance
▪ Adoption of technology.
▪ Visibility of expansion plans
▪ Low Debt
▪ http://articles.economictimes.indiatimes.com
₹ -
₹ 200.00
₹ 400.00
₹ 600.00
₹ 800.00
₹ 1,000.00
₹ 1,200.00
₹ 1,400.00
2014 2015 2016 2017
Estimated Fair Price
Estimated Fair Price
Under Current assumptions, Apollo remains a BUY
with strong upside potential for 2 more years

Weitere ähnliche Inhalte

Was ist angesagt?

Fortis Hospital (India) Analysis
Fortis Hospital (India) Analysis Fortis Hospital (India) Analysis
Fortis Hospital (India) Analysis
hemant vyas
 
Ffdi on health sector
Ffdi on health sectorFfdi on health sector
Ffdi on health sector
Ajay Mishra
 
Market Research Report : Hospital Market in India 2012
Market Research Report :   Hospital Market in India 2012Market Research Report :   Hospital Market in India 2012
Market Research Report : Hospital Market in India 2012
Netscribes, Inc.
 
Healthcare Industry In India
Healthcare Industry In IndiaHealthcare Industry In India
Healthcare Industry In India
healthcaremanas
 
Indian Healthcare Medical Devices Industry
Indian Healthcare Medical Devices IndustryIndian Healthcare Medical Devices Industry
Indian Healthcare Medical Devices Industry
Aklanta Kalita
 
Medical milestones
Medical milestonesMedical milestones
Medical milestones
amit289
 
Final report healthcare industry
Final report healthcare industryFinal report healthcare industry
Final report healthcare industry
Anjali Raj
 

Was ist angesagt? (20)

Fortis Hospital (India) Analysis
Fortis Hospital (India) Analysis Fortis Hospital (India) Analysis
Fortis Hospital (India) Analysis
 
Mkt strategy
Mkt strategyMkt strategy
Mkt strategy
 
Forties Hospital
Forties HospitalForties Hospital
Forties Hospital
 
Healthcare industry- Analysis and Contribution to GDP
Healthcare industry- Analysis and Contribution to GDPHealthcare industry- Analysis and Contribution to GDP
Healthcare industry- Analysis and Contribution to GDP
 
Healthcare Sector Report October 2017
Healthcare Sector Report October 2017Healthcare Sector Report October 2017
Healthcare Sector Report October 2017
 
Industry analysis on Apollo Hospitals
Industry analysis on Apollo HospitalsIndustry analysis on Apollo Hospitals
Industry analysis on Apollo Hospitals
 
FORTIS ESCORTS HOSPITAL
FORTIS ESCORTS HOSPITAL FORTIS ESCORTS HOSPITAL
FORTIS ESCORTS HOSPITAL
 
Ffdi on health sector
Ffdi on health sectorFfdi on health sector
Ffdi on health sector
 
Apollo Hospitals
Apollo HospitalsApollo Hospitals
Apollo Hospitals
 
Market Research Report : Hospital Market in India 2012
Market Research Report :   Hospital Market in India 2012Market Research Report :   Hospital Market in India 2012
Market Research Report : Hospital Market in India 2012
 
Healthcare Industry In India
Healthcare Industry In IndiaHealthcare Industry In India
Healthcare Industry In India
 
Apollo Hospitals
Apollo HospitalsApollo Hospitals
Apollo Hospitals
 
Market understanding of healthcare industry in 1 tier cities of india
Market understanding of healthcare industry in 1 tier cities of indiaMarket understanding of healthcare industry in 1 tier cities of india
Market understanding of healthcare industry in 1 tier cities of india
 
Apollo project
Apollo projectApollo project
Apollo project
 
STUDY OF HEALCARE FACILITIES AND ACCESS TO HEALTHCARE IN BADSHAHIBAGH AND NEA...
STUDY OF HEALCARE FACILITIES AND ACCESS TO HEALTHCARE IN BADSHAHIBAGH AND NEA...STUDY OF HEALCARE FACILITIES AND ACCESS TO HEALTHCARE IN BADSHAHIBAGH AND NEA...
STUDY OF HEALCARE FACILITIES AND ACCESS TO HEALTHCARE IN BADSHAHIBAGH AND NEA...
 
Indian Healthcare Medical Devices Industry
Indian Healthcare Medical Devices IndustryIndian Healthcare Medical Devices Industry
Indian Healthcare Medical Devices Industry
 
Healthcare Sectore Report - January 2017
Healthcare Sectore Report - January 2017Healthcare Sectore Report - January 2017
Healthcare Sectore Report - January 2017
 
Medical milestones
Medical milestonesMedical milestones
Medical milestones
 
Fortis healthcare
Fortis healthcareFortis healthcare
Fortis healthcare
 
Final report healthcare industry
Final report healthcare industryFinal report healthcare industry
Final report healthcare industry
 

Ähnlich wie Apollo Hospital Enterprises Valuation

ICICI Prudential Growth Fund - Series 1 (Presentation)
ICICI Prudential Growth Fund - Series 1 (Presentation)ICICI Prudential Growth Fund - Series 1 (Presentation)
ICICI Prudential Growth Fund - Series 1 (Presentation)
iciciprumf
 
Increment Strategy FY 2014-15 Slide Share
Increment Strategy FY 2014-15 Slide ShareIncrement Strategy FY 2014-15 Slide Share
Increment Strategy FY 2014-15 Slide Share
Vipul Saxena
 
Monthly Asia Presentation December 2014
Monthly Asia Presentation December 2014Monthly Asia Presentation December 2014
Monthly Asia Presentation December 2014
Cedric Chehab
 
DSP Nifty Healthcare ETF Presentaion.pdf
DSP Nifty Healthcare ETF Presentaion.pdfDSP Nifty Healthcare ETF Presentaion.pdf
DSP Nifty Healthcare ETF Presentaion.pdf
DSP Mutual Fund
 
DSP Healthcare Fund Presentatio2023n.pdf
DSP Healthcare Fund Presentatio2023n.pdfDSP Healthcare Fund Presentatio2023n.pdf
DSP Healthcare Fund Presentatio2023n.pdf
DSP Mutual Fund
 
RPI to CPI - Investment Implications
RPI to CPI - Investment ImplicationsRPI to CPI - Investment Implications
RPI to CPI - Investment Implications
Redington
 
Fast food restuarent abhijeet karmakar
Fast food restuarent  abhijeet karmakarFast food restuarent  abhijeet karmakar
Fast food restuarent abhijeet karmakar
ANIKET KULKARNI
 

Ähnlich wie Apollo Hospital Enterprises Valuation (20)

Healthcare global enterprises ltd. ipo update
Healthcare global enterprises ltd. ipo updateHealthcare global enterprises ltd. ipo update
Healthcare global enterprises ltd. ipo update
 
Choice Equity Broking IPO note on Healthcare Global Enterprises
Choice Equity Broking IPO note on Healthcare Global EnterprisesChoice Equity Broking IPO note on Healthcare Global Enterprises
Choice Equity Broking IPO note on Healthcare Global Enterprises
 
2016 11 21 neo company overview presentation
2016 11 21   neo company overview presentation2016 11 21   neo company overview presentation
2016 11 21 neo company overview presentation
 
DSP Healthcare Fund
DSP Healthcare FundDSP Healthcare Fund
DSP Healthcare Fund
 
Hemas Holdings Investor Presentation 1H 2013/14
Hemas Holdings Investor Presentation 1H 2013/14Hemas Holdings Investor Presentation 1H 2013/14
Hemas Holdings Investor Presentation 1H 2013/14
 
ICICI Prudential Growth Fund - Series 1 (Presentation)
ICICI Prudential Growth Fund - Series 1 (Presentation)ICICI Prudential Growth Fund - Series 1 (Presentation)
ICICI Prudential Growth Fund - Series 1 (Presentation)
 
BFSI TAM AD.EX SUMMARY 2010 2015
BFSI TAM AD.EX SUMMARY 2010 2015BFSI TAM AD.EX SUMMARY 2010 2015
BFSI TAM AD.EX SUMMARY 2010 2015
 
In hc-deloitte-india-annual-compensation-trends-survey-report-fy-2016-noexp
In hc-deloitte-india-annual-compensation-trends-survey-report-fy-2016-noexpIn hc-deloitte-india-annual-compensation-trends-survey-report-fy-2016-noexp
In hc-deloitte-india-annual-compensation-trends-survey-report-fy-2016-noexp
 
Increment strategy FY 2014 15
Increment strategy FY 2014 15 Increment strategy FY 2014 15
Increment strategy FY 2014 15
 
Increment Strategy FY 2014-15 Slide Share
Increment Strategy FY 2014-15 Slide ShareIncrement Strategy FY 2014-15 Slide Share
Increment Strategy FY 2014-15 Slide Share
 
Monthly Asia Presentation December 2014
Monthly Asia Presentation December 2014Monthly Asia Presentation December 2014
Monthly Asia Presentation December 2014
 
India Equity Strategy Presentation (2016) - HSBC
India Equity Strategy Presentation (2016) - HSBCIndia Equity Strategy Presentation (2016) - HSBC
India Equity Strategy Presentation (2016) - HSBC
 
DSP Nifty Healthcare ETF Presentaion.pdf
DSP Nifty Healthcare ETF Presentaion.pdfDSP Nifty Healthcare ETF Presentaion.pdf
DSP Nifty Healthcare ETF Presentaion.pdf
 
China Healthcare Market potentials & opportunities
China Healthcare Market   potentials & opportunitiesChina Healthcare Market   potentials & opportunities
China Healthcare Market potentials & opportunities
 
DSP Healthcare Fund
DSP Healthcare FundDSP Healthcare Fund
DSP Healthcare Fund
 
DSP Healthcare Fund Presentatio2023n.pdf
DSP Healthcare Fund Presentatio2023n.pdfDSP Healthcare Fund Presentatio2023n.pdf
DSP Healthcare Fund Presentatio2023n.pdf
 
Presentation Health Insurance PPT.pdf
Presentation  Health Insurance PPT.pdfPresentation  Health Insurance PPT.pdf
Presentation Health Insurance PPT.pdf
 
RPI to CPI - Investment Implications
RPI to CPI - Investment ImplicationsRPI to CPI - Investment Implications
RPI to CPI - Investment Implications
 
2016 11 07 neo company overview presentation
2016 11 07   neo company overview presentation2016 11 07   neo company overview presentation
2016 11 07 neo company overview presentation
 
Fast food restuarent abhijeet karmakar
Fast food restuarent  abhijeet karmakarFast food restuarent  abhijeet karmakar
Fast food restuarent abhijeet karmakar
 

Kürzlich hochgeladen

From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
From Luxury Escort : 9352852248 Make on-demand Arrangements Near yOU
 
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
9953056974 Low Rate Call Girls In Saket, Delhi NCR
 
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
dipikadinghjn ( Why You Choose Us? ) Escorts
 
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
dipikadinghjn ( Why You Choose Us? ) Escorts
 
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
amitlee9823
 
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
dipikadinghjn ( Why You Choose Us? ) Escorts
 
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
dipikadinghjn ( Why You Choose Us? ) Escorts
 

Kürzlich hochgeladen (20)

7 tips trading Deriv Accumulator Options
7 tips trading Deriv Accumulator Options7 tips trading Deriv Accumulator Options
7 tips trading Deriv Accumulator Options
 
Top Rated Pune Call Girls Dighi ⟟ 6297143586 ⟟ Call Me For Genuine Sex Servi...
Top Rated  Pune Call Girls Dighi ⟟ 6297143586 ⟟ Call Me For Genuine Sex Servi...Top Rated  Pune Call Girls Dighi ⟟ 6297143586 ⟟ Call Me For Genuine Sex Servi...
Top Rated Pune Call Girls Dighi ⟟ 6297143586 ⟟ Call Me For Genuine Sex Servi...
 
From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
From Luxury Escort Service Kamathipura : 9352852248 Make on-demand Arrangemen...
 
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
 
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
( Jasmin ) Top VIP Escorts Service Dindigul 💧 7737669865 💧 by Dindigul Call G...
 
Vip Call US 📞 7738631006 ✅Call Girls In Sakinaka ( Mumbai )
Vip Call US 📞 7738631006 ✅Call Girls In Sakinaka ( Mumbai )Vip Call US 📞 7738631006 ✅Call Girls In Sakinaka ( Mumbai )
Vip Call US 📞 7738631006 ✅Call Girls In Sakinaka ( Mumbai )
 
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Taloja 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
 
Call Girls Service Pune ₹7.5k Pick Up & Drop With Cash Payment 9352852248 Cal...
Call Girls Service Pune ₹7.5k Pick Up & Drop With Cash Payment 9352852248 Cal...Call Girls Service Pune ₹7.5k Pick Up & Drop With Cash Payment 9352852248 Cal...
Call Girls Service Pune ₹7.5k Pick Up & Drop With Cash Payment 9352852248 Cal...
 
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance BookingCall Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
Call Girls Koregaon Park Call Me 7737669865 Budget Friendly No Advance Booking
 
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
 
8377087607, Door Step Call Girls In Kalkaji (Locanto) 24/7 Available
8377087607, Door Step Call Girls In Kalkaji (Locanto) 24/7 Available8377087607, Door Step Call Girls In Kalkaji (Locanto) 24/7 Available
8377087607, Door Step Call Girls In Kalkaji (Locanto) 24/7 Available
 
Top Rated Pune Call Girls Sinhagad Road ⟟ 6297143586 ⟟ Call Me For Genuine S...
Top Rated  Pune Call Girls Sinhagad Road ⟟ 6297143586 ⟟ Call Me For Genuine S...Top Rated  Pune Call Girls Sinhagad Road ⟟ 6297143586 ⟟ Call Me For Genuine S...
Top Rated Pune Call Girls Sinhagad Road ⟟ 6297143586 ⟟ Call Me For Genuine S...
 
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
 
Business Principles, Tools, and Techniques in Participating in Various Types...
Business Principles, Tools, and Techniques  in Participating in Various Types...Business Principles, Tools, and Techniques  in Participating in Various Types...
Business Principles, Tools, and Techniques in Participating in Various Types...
 
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
Call Girls Banaswadi Just Call 👗 7737669865 👗 Top Class Call Girl Service Ban...
 
(Sexy Sheela) Call Girl Mumbai Call Now 👉9920725232👈 Mumbai Escorts 24x7
(Sexy Sheela) Call Girl Mumbai Call Now 👉9920725232👈 Mumbai Escorts 24x7(Sexy Sheela) Call Girl Mumbai Call Now 👉9920725232👈 Mumbai Escorts 24x7
(Sexy Sheela) Call Girl Mumbai Call Now 👉9920725232👈 Mumbai Escorts 24x7
 
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...
 
Bandra High Profile Sexy Call Girls,9833754194-Khar Road Speciality Call Girl...
Bandra High Profile Sexy Call Girls,9833754194-Khar Road Speciality Call Girl...Bandra High Profile Sexy Call Girls,9833754194-Khar Road Speciality Call Girl...
Bandra High Profile Sexy Call Girls,9833754194-Khar Road Speciality Call Girl...
 
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
VIP Independent Call Girls in Mumbai 🌹 9920725232 ( Call Me ) Mumbai Escorts ...
 
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
VIP Call Girl in Mumbai Central 💧 9920725232 ( Call Me ) Get A New Crush Ever...
 

Apollo Hospital Enterprises Valuation

  • 1. Investment Analysis Apollo Hospital BY: ANAKSHI DHAMA DEEPAN LOGANATHAN SINJANA GHOSH BUY INR 939.58
  • 2. Macro Economic Analysis Of The Indian Health Care Sector ▪ Valued at US$79 billion in 2012 and is expected to reach US$ 158 billion by 2017. ▪ Driving growth factors are: ▪ rising population, increasing disposable income, increasing lifestyle related health issues, changing patent laws , cheaper treatment costs, medical tourism, improving health insurance penetration, government initiatives and focus on public private partnership (PPP) models ▪ Shares of private sector in health care industry is expected to increase from 66%(2005) to 81%(2015) ▪ The Indian pharmaceutical industry grew from $0.8 billion in 1980 to $21.73 billion in 2010 and is expected to grow further. ▪ Branded generics are expected to become more prevalent in India as many global players are planning to launch them after their patents expire. ▪ The Indian government has implemented various initiatives to increase insurance coverage and reduce healthcare costs Referencehttp://www.prnewswire.com, http://www.business-standard.com, 69% 12% 9% 7% 3% Total healthcare revenues in the country Hospitals Pharmaceuticals Medical equipment &supplies Medical Insurance Diagnostics
  • 3. Apollo Hospitals ▪ Largest hospital chains (50 hospitals including 14 managed) in India with aggressive expansion plans. ▪ Stable revenue stream with sustainable growth ▪ Pharmacy segment has started to contributing to profits ▪ One of the largest retail pharmacy chains in India ▪ Medical Tourism: a new growth factor ▪ Reference: http://content.indiainfoline.com Apollo Hospitals Pharmacy Insurance
  • 4. Weighted Average Cost Of Capital • Sensex • Nifty The market • 10 yr Inflation (CPI): 7.0% • No Sovereign risks Macroeconomic variables • 10 yr treasury bonds • better duration matching compared to short-term treasury bills, and smaller beta and lower liquidity premium compared to longer term (30-year) bonds Choice of risk- free rate
  • 5. Weighted Average Cost Of Capital Variable Value Historical Levered Beta 0.6 Historical D/E 0.3 Tax rate 34% 10 yr T-Bill 8.05% Default spread 2.00% Risk free rate 6.05% Market Risk Premium 3% Ke 11.47 Kd post tax 7.7% WACC 10.38%
  • 6. Improving operating metrics and margin drivers 0 2000 4000 6000 8000 10000 12000 14000 16000 Total number of beds Average number of beds available during the year Series 3 Number of Beds 68% 69% 70% 71% 72% 73% 74% 75% 76% 77% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 BOR BOR
  • 7. Contd.. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% rate of growth of finance cost Net D/E -10% -5% 0% 5% 10% 15% 20% 25% 30% Revenue/IN patient Total HC revenue Growth Rate
  • 8. Overall performance with conservative assumptions 0% 5% 10% 15% 20% 25% 2011 2012 2013 2014 2015 2016 2017 2018 EBITDA EBIT PBT PAT 21% 21% 24% 30% 23% 25% 27% 27% 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 PHARMACY EBITDA Segment contribution to EBITDA
  • 9. Over 10% upside ▪ FCFE: Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
  • 10. Valuation of Firm ▪ FCFF: FCFE – New Debt issued + current maturities of LT debt + (1-tax rate)*Debt
  • 11. Sensitivity analysis In Percentage Cost of Equity 10 11 11.56 12 13 TerminalGrowthRate 2 775.33 771.04 768.7017 766.8978 762.9 3 850.8 846.5 844.1641 842.36 838.37 4 946.22 941.92 939.5795 937.7755 933.78 5 1070.7 1066.41 1064.067 890.29 1058.27 CMP: INR 851.75 Under stress conditions CRISIL assumptions for growth
  • 12. Valuation multiples 0.00 10.00 20.00 30.00 40.00 50.00 60.00 Forward P/E P/E multiple Linear (P/E multiple) 0.0 0.5 1.0 1.5 2.0 2.5 2009 2010 2011 2012 2013 2014 2015 2016 PEG PEG - 10.00 20.00 30.00 40.00 50.00 60.00 70.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EV/EBIDTA EV/EBIDTA 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 RoE RoE
  • 13. Risk Factor In The Overall Business ▪ Unavailability of skilled professionals might impact prospects: Unavailability of skilled professionals or the inability to retain key doctors could impact future prospects. ▪ Rising real estate prices: Land and buildings together account for 40-45% of the total capital costs in setting up a hospital. Rising real estate prices, especially in metros and tier I cities, are making it difficult to put up commercially viable hospitals. ▪ Delay in addition of new beds: Over the next two-three years, Apollo is likely to add 3,000 beds at different locations. More-than-expected delays or cost overruns may impact financials and, consequently, the valuations.
  • 14. Reason Why Apollo Hospitals stock continue to remain buy ▪ Consistency in performance ▪ Adoption of technology. ▪ Visibility of expansion plans ▪ Low Debt ▪ http://articles.economictimes.indiatimes.com
  • 15. ₹ - ₹ 200.00 ₹ 400.00 ₹ 600.00 ₹ 800.00 ₹ 1,000.00 ₹ 1,200.00 ₹ 1,400.00 2014 2015 2016 2017 Estimated Fair Price Estimated Fair Price Under Current assumptions, Apollo remains a BUY with strong upside potential for 2 more years