Apollo Hopsitals (APHS) to benefit from an improving maturity profile

Chirag Batavia • 30 March 2020

Apollo Hospitals Enterprise Ltd

 KIE expects Apollo Hopsitals (APHS) to benefit from an improving maturity profile, even as the near-term outlook is challenging given lower volume of international and domestic travel patients, as well as deferment in OPD footfalls and elective surgeries, though, KIE expects a full demand recovery in 2HFY21. 

 KIE expects APHS to face significant pressure in near-term earnings on account of COVID-19, with the impact likely at multiple levels: 1) Decline in international patient volumes; 2) Decline in outpatient visits; 3) Deferment of elective cases; and 4) Shift in ordering patterns could hurt SAP growth. 

 As per KIE estimates, 60-65% of costs in hospitals are fixed in nature; consequently lower utilization will lead to material decline in EBITDA margin. KIE believes the impact will likely be transitory, and expects recovery in operations from 2QFY21 with normalization of business in 2HFY2. 

 The pace of recovery depends on resumption of international travel, particularly, from the Indian sub-continent, Middle East and South East Asian regions. KIE has cut EBITDA estimates for FY20 by 8% and FY21 by 18%. KIE EBITDA estimates for FY22E are largely unchanged, though deleveraging and margin expansion at new units will likely be delayed by 12 months.

KIE gives a BUY call on Aplool Hospitals Ltd on 30/03/2020
  CMP: Rs.1167
  Fair Value: Rs.1820
  Potential Upside: 56%
  Market Cap: Rs.163.88 bn
  Time Frame: 12 months

Note: The above is brief note on the company, based on the inputs of KIE research report dated 20th March 2020 which is available on our website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental.              

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Home First (HFFC) reported 24% earnings growth, with 19% net interest income growth in Q2FY25

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Home First Finance (HOMEFIRST) Home First remains consistent on operational and financial parameters. Home First (HFFC) reported 24% earnings growth, with 19% net interest income growth in Q2FY25. Gross stage-3 ratio was flat qoq at 1.7%, stage-2 ratio declined 6 bps qoq to 1.1%. While other asset classes have reported mixed trends residential home loans, as an asset class, continues to stand tall. Home First, with 85% home loan exposure, is well-placed on the above. We expect the company to deliver 25% earnings CAGR for FY25-27E. We remain assertive with a BUY rating and FV of Rs1,360 (no change). Note: The above is a brief note on the company, based on the inputs of KIEresearch report dated 25111Oct, 2024, which is available onour website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamenta1. Disclaimer: http://bit.ly/2n5Ax1E https://www.kotaksecurities.oom/ksweb/research/kotak-research-reports/top-weekly-picks
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