Shares of Apollo Hospitals Enterprise Ltd have gained 10% since it announced its June quarter. With the performance reassuring investors on asset optimization and profit metrics, the stock hit high of Rs 1,4687. Losses the company’s new ventures, housed under Apollo Health and Lifestyle Ltd., reduced significantly. Additionally, higher revenues at its pharmacy and hospitals improved operating earnings by 27%. Consolidated profit margins rose to 11.4% year-on-year, taking it to the highest levels in recent quarters. Even so, the profitability gap between new and established hospitals remains enormous and has scope for improvement. Also, per-store metrics of relatively new pharmacy stores have room to improve.
According to the Edelweiss Securities Ltd, two of Apollo Hospitals Enterprise’s businesses are yet to fuel return on capital employed (RoCE), as new hospitals with about Rs 2,100 crore in capital employed is running at 63% occupancy; Apollo Health and Lifestyle, with about Rs 600 crore in capital employed, is clocking about 35% utilization.