Ticker: 508869/APOLLO HOSP
ISIN: INE437A01024
Industry Analysis: Healthcare is one of the basic needs of the Human Race. There are many reasons we need healthcare with food and home. Life expectancy was low in the stone age when there was no knowledge of the illness. After the development of medicine, humans realized that not only medication but also the atmosphere is essential; that is where the healthcare industry started. Ayurveda, one of the oldest medicinal systems developed, and healthcare also Developed.
India’s competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. For example, the surgery cost in India is about one-tenth of that in the US or Western Europe.
Today healthcare, comprising hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment, is the third fastest-growing Sector in India after IT and telecommunication. Healthcare has become one of India’s largest sectors – both in terms of revenue and employment. The Indian healthcare sector is growing briskly due to its strengthening coverage, services, and increasing Expenditure by the public and private players. Indian healthcare delivery system is categorized into two major components – public and private. The Government, i.e., the public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centers (PHCs) in rural areas. The private sector offers most secondary, tertiary, and quaternary care institutions with a significant concentration in metros, tier I, and tier-II cities.
Company analysis: Apollo Hospital is one of the leading Healthcare chains. The company owns 69 hospitals in which 9500+ Beds and 7000+ clinicians are available to care for the patients—370000 appointments FY 16 in out of which 57000+ chemotherapy sitting and 160000 radiotherapies sitting. The company’s strengths are excellent service and the availability of sophisticated medical equipment like PET. In addition, the company specializes in high-end treatment for many organ-specific operations like liver transplants. The company Also operates in gastrointestinal disorders and related services and has a pharmacy department. Though CRISIL Rates it AA, there are still some concerns and threats for business.
SHAREHOLDING: BSE Data
Financial Performance and Ratio
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Investment Rationale and prospects: India requires 600,000 to 700,000 additional beds over the next five to six years, indicative of an investment opportunity of US$ 25-30 billion. Given this demand for capital, the number of transactions in the healthcare space is expected to increase soon. The average investment size by private equity funds in healthcare chains has increased to US$ 20-30 million from US$ 5-15 million. ( ibef.org)
The Indian healthcare market is worth US$ 100 billion and is expected to grow to US$ 280 billion by 2020, with a Compound Annual Growth Rate (CAGR) of 22.9 percent. Healthcare delivery, including hospitals, nursing homes, diagnostics centers, and pharmaceuticals, constitutes 65 percent of the overall market. The Healthcare Information Technology (IT) market, which is valued at US$ 1 billion currently, is expected to grow 1.5 times by 2020
Today India is a young economy. The average age of the Indian population is around 25. But as the population growth rate is coming down and very near to the replacement rate, which is 2.1. It means that the average age of the population will grow in the future. For that increased population of older people, healthcare is one of the Basic Needs. Apollo is one of the big names in the Sector. As it is one of India’s two biggest healthcare chains, it’s essential to watch it. Though no diagnostic business is attached here, the insurance business is still crucial. So it’s necessary to keep on the RADAR. A significant part of Expenditure is on facilities and machinery. The high attrition rate among nursing is a concern for the company. The recent increase in debt is affecting the company. But prospects are bright, and it is impossible to ignore the company.
