ApolloHospitals_Crisil_260511 | Dividend | Investing

Apollo Hospitals Enterprise Ltd

Q4FY11 First Cut

Enhancing investment decisions
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10-25% from CMP) Strong downside (<-25% from CMP) Analyst Disclosure Each member of the team involved in the preparation of the grading report. Nothing in this Report constitutes investment. The Data / Report are subject to change without any prior notice. Disclaimer: This Company-commissioned Report (Report) is based on data publicly available or from sources considered reliable by CRISIL (Data). adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. for any purpose. However. CRISIL especially states that it has no financial liability. hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company. whatsoever. Opinions expressed herein are our current opinions as on the date of this Report. The Report is not a recommendation to buy / sell or hold any securities of the Company. to the subscribers / users of this Report. legal. . accounting or tax advice or any solicitation. © CRISIL Limited. All Rights Reserved. whatsoever. This Report is for the personal information only of the authorized recipient in India only. CRISIL Fundamental Grade 5/5 4/5 3/5 2/5 1/5 Assessment Excellent fundamentals Superior fundamentals Good fundamentals Moderate fundamentals Poor fundamentals CRISIL Valuation Grade 5/5 4/5 3/5 2/5 1/5 Assessment Strong upside (>25% from CMP) Upside (10-25% from CMP) Align (+-10% from CMP) Downside (.Explanation of CRISIL Fundamental and Valuation (CFV) matrix The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP). CRISIL does not guarantee the accuracy. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person – especially outside India or published or copied in whole or in part.

671 29.9 12.6 1. 5 4 3 2 1 1 2 3 4 5 Poor Fundamentals Valuation Grade Strong Downside Strong Upside KEY STOCK STATISTICS NIFTY / SENSEX NSE/BSE ticker Face value (Rs per share) Shares outstanding (mn) Market cap (Rs mn)/(US$ mn) 5. CR I SIL Equ it ies est im ate PERFORMANCE VIS-À-VIS MARKET Returns 1-m Apollo NIFTY 1% -8% 3-m 5% 3% 6-m 1% -8% 12-m 41% 9% ANALYTICAL CONTACT Sudhir Nair (Head) Ravi Dodhia Bhaskar Bukrediwala Client servicing desk +91 22 3342 3561 © CRISIL Limited.6 8.032 1.289/1.1% in FY11.1 11.7%.279 18.1 0.com rdodhia@crisil.8. during the same period.7 36.8 8.8 10.8 0.608/1339 Enterprise value (Rs mn) /(US$ mn) 67.216 22.265 3.5 44.142 2.2 61. The healthcare services (hospitals) and the pharmacy segments registered a y-o-y growth of 25.1 0. We remain positive on the growth prospects of healthcare services and Apollo’s leadership position in the organised healthcare market.0% 3.0 FY12E 29.8 1. Consolidated EBITDA margins improved 120 bps y-o-y to 16. All Rights Reserved.6% y-o-y to Rs 26.7% 24.839 14. respectively. Valuations: Current market price has upside We continue to use the discounted cash flow method to value Apollo.8% y-o-y growth to Rs 3. clientservicing@crisil. We maintain our fundamental grade of 5/5.9% 38.9 FY13E 34.6 8.9 27.9% 3.1 FY10 20.189 1.4 KEY FORECAST (Rs mn) Operating income EBITDA Adj PAT Adj EPS-Rs EPS growth (%) Dividend yield RoCE (%) RoE (%) PE (x) P/BV (x) EV/EBITDA (x) FY09 16. • Improvement in EBITDA margins led to strong growth in PAT which grew 61.839 mn in FY11. Consolidated PAT grew 33.7% yo-y to Rs 1.9 34.487 52-week range (Rs) (H/L) 850/408 Beta Free float (%) Avg daily volumes (30-days) Avg daily value (30-days) (Rs mn) 0.3% y-o-y to Rs 471 mn in Q4FY11.4% NM: Not meaningful.054 4.com CRISIL EQUITIES | 1 snair@crisil. CMP: Current Market Price #FY11 numbers based on the abridged financials Sou rce: Com pan y.9 3.7 9. our valuation grade is 4/5.8 FY11# 26.395/18.9 3.3% 33. Consolidated revenues for FY11 grew 28.2 7. We may revise our estimates upwards post interaction with the management.2% 33.4 49.8 SHAREHOLDING PATTERN 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jun-10 Promoter Sep-10 FII Dec-10 DII Mar-11 Others 33.1 1.1 57.5% 33.1 bn.6 21.6% 23.7 60.878 3. We may revisit our estimates and fair value after interaction with the management.7% y-o-y to 6. • EBITDA margins increased by 223 bps y-o-y to 15.com bsbukrediwala@crisil.7% 39. Given the current market price.2% in Q4FY11 supported by improvement in margins in the hospital services business and a turnaround in the pharmacy business.5% 33.5 3.7% 24.2 9.7 10.9 32.938 2.1% 3. 2011 Fair Value Rs 533 CMP Rs 485 CFV MATRIX Fundamental Grade Apollo Hospitals Enterprise Ltd’s (Apollo’s) Q4FY11 results exceeded CRISIL Equities’ expectations on higher revenues from the newly established hospitals and the decline in losses from associates.8 1.214 mn.8% 47.6 16. EPS during the same period registered 59.7% 38.8 9.6% and 36. We maintain our fair value of Rs 533 per share.8 16.009 8.288 1. Q4FY11 result analysis • Apollo’s Q4FY11 standalone revenues grew by 28.Polaris Software Limited Apollo Hospitals Enterprise Ltd Business momentum remains intact Q4FY11 first cut: Another strong quarter Fundamental Grade Valuation Grade Industry 4/5 (Strong fundamentals) 5/5 (Excellent fundamentals) 5/5 (CMP has strong upside) 4/5 upside) Information technology Healthcare Provider & Services Excellent Fundamentals May 24.2% 3.com .4% 29.56 66.232 4.9 8.311 5.1 22.6 26.012 APOLLOHOSP 5 124.346 10.

..1 (3.9) 2.009 6.693 876 1.7 Q4FY10 q-o-q (%) y-o-y (%) 4.7 29.2% 183 764.864 3.9 587 2.8) 15. CR I SIL Equ it ies Q4FY11 6.1% 7.000 2.829 5.4 35.561 4.8 18bps 7.194 53% 904 968 943 15. CR I SIL Equ it ies Share price movement vs.000 0 12% 11% Mar-09 Dec-09 Mar-10 Dec-10 Mar-11 Mar-09 Dec-09 Mar-10 Dec-10 Sep-09 Sep-10 Sep-09 Net Sales EBITDA Margin (RHS) PAT PAT Margin (RHS) Sou rce: Com pan y.000 4.829 2.9 (40.5 155bps 22. CRISIL EQUITIES | 2 26-Mar-11 24-Jun-10 10-Jan-10 30-Jan-11 30-Apr-10 30-Jul-08 05-Jul-09 11-Apr-09 23-Oct-08 12-Oct-10 .6 19.3% 61.4% 543 2.6 2.7 223bps 26.1 0.0% 9.8 5.817 1.1 8.2 (2.000 6.000 4. CR I SIL Equ it ies Sou rce: N SE.5 -44bps 2.6 0.8 2.8 -5bps 0.2) 21.8 47.501 52% 797 902 629 13.5% 7.520 8.1 (35.0% 11. CR ISIL Equ iti es © CRISIL Limited.258 9.000 1.4 53. NIFTY 300 250 200 150 100 50 0 Fair value movement since initiation (Rs) 700 600 500 400 300 200 100 0 ('000) 7.2% 703 3.3 61. (Rs mn) 7.6% 12% 10% 8% 6% 4% 2% 3.3 34.520 1.572 3.077 2.0% 123.8 19.5% 6.233 5.6% 124.2 24.8 24.8 Q3FY11 6.000 5.000 0 10-Jun-10 16-Jan-09 27-Nov-10 Sep-10 Mar-11 20-May-11 Apollo Jun-09 Jun-10 Jun-09 06-May-08 16-May-11 06-Mar-10 Jun-10 06-Dec-10 22-Sep-09 11-Feb-08 20-Feb-11 17-Mar-10 22-Dec-09 28-Sep-09 03-Sep-10 16-Nov-09 18-Aug-10 Apollo NIFTY Total Traded Quantity (RHS) CRISIL Fair Value Sou rce: Com pan y.000 5.060 4.864 6.8) EBITDA margin registered strong y-o-y growth.7 20.6 27.4 3.5% 7.5% 8.6% 7.813 15.4 3.222 702 1.7 32.702 3.214 1.809 4.2 58bps 24.9 59.7% 178 764.0% 144 484.6 31.6 FY10 y-o-y(%) 18.504 52% 2.6 -53bps 101.817 7.Apollo Hospitals Enterprise Ltd Q4FY11 Result Summary (Standalone) (Rs mn) Net sales Raw materials cost Raw materials cost (% of net sales) Employees cost Other expenses EBITDA EBITDA margin Depreciation EBIT Interest and finance charges Operating PBT Other Income PBT Tax PAT Adj PAT Adj PAT margin No of equity shares (Mn) Adj EPS (Rs) Sou rce: Com pan y.000 3.320 12..276 53% 3.066.6 1.4 134 631 51 682 224 458 458 7.000 6.1 18.000 14% 13% 16% 15% 14% 13% 17% 16% 16% 17% 17% 17% 16% 15% .8% 124.4 60.000 3.009 3. CR I SIL Equ it ies Sou rce: Com pan y.7 38.9 57.892 330 2. leading to increase in PAT margins (Rs mn) 600 500 400 300 200 100 291 448 341 439 292 393 496 458 471 0% 0 7.7 3.3 153bps 0.1 55.7 3.0 2.270 378 1.4) (12..0 76bps 29.770 16.0 61.480 214 2. All Rights Reserved.6% 124.7 14.911 4.8 28.8 FY11 23.6 107 378 56 433 141 292 292 6.315 53% 973 979 948 15.214 3.8 158 607 59 666 195 471 471 7.5 50.000 2.

1 3.2 3.1 0.5 0.1 8.656 459 1.613 (338) 948 (1.050 2.9% 393 393 34% 7.165 13.498) 1.613 873 (99.642 3.0 2.6 16.7 35.0 6.351 14.00) 1.5 9.5 0.Apollo Hospitals Enterprise Ltd FINANCIALS Income statement (Rs mn) Operating income EBITDA EBITDA margin Depreciation EBIT Interest Operating PBT Other income Exceptional inc/(exp) PBT Tax provision Minority interest PAT (Reported) Less: Exceptionals Adjusted PAT Ratios FY09 Growth Operating income (%) EBITDA (%) Adj PAT (%) Adj EPS (%) Profitability EBITDA margin (%) Adj PAT Margin (%) RoE (%) RoC E (%) RoIC (%) Valuations Price-earnings (x) Price-book (x) EV/EBITDA (x) EV/Sales (x) Dividend payout ratio (%) Dividend yield (%) B/S ratios Inventory days C reditors days Debtor days Working capital days Gross asset turnover (x) Net asset turnover (x) Sales/operating assets (x) C urrent ratio (x) Debt-equity (x) Net debt/equity (x) Interest coverage Per share FY09 Adj EPS (Rs) C EPS Book value Dividend (Rs) Actual o/s shares (mn) 8.669 6.9 24.0 1.499 (514) 632 (552) 1.241 602 14.8 44.282 602 1.2 Cash flow (Rs mn) Pre-tax profit Total tax paid Depreciation Working capital changes Net cash from operations Cash from investments C apital expenditure Investments and others Net cash from investments Cash from financing Equity raised/(repaid) Debt raised/(repaid) Dividend (incl.0 Quarterly financials* (Rs mn) Net Sales C hange (q-o-q) EBITDA C hange (q-o-q) EBITDA margin PAT Adj PAT C hange (q-o-q) Adj PAT margin Adj EPS Q4FY10 Q1FY11 4.954 6.358 32.3 37.2 11.703) 1.1% 948 3.715 1.0% 292 292 -34% 6.075) (545) FY09 1.4 13.0 28.2 6.037) (644) 10.7% 458 458 -8% 7.463 (504) (70) 2.241 3. expenditure Total assets 1.7 0.3 15.680 341 (6) 2.0 135.009 2% 943 -5% 15.240 15.8 25.693 5.0 0.2 34.117 (2.1 3.9 3.775) 328 (3.5 3.7 31 56 39 46 1.9 120.7 15.690 3.819 530 26.095 1.6 21.6 12.776 9.3 7.142 2.744 2.117 (10.0% 4. CRISIL EQUITIES | 3 .1 7.288 14.6 38.6 FY11# 14.939 2.154 8.6% 3.4 4.6% 3.9 16.5 33.189 16.4 0.2% 632 1.330 5.414 (3.760 12.8 0.413 FY09 FY10 FY11# #FY11 numbers based on the abridged financials *Standalone financials Sou rce: Com pan y.7 2.524 12.864 12% 996 13% 17.975 (407) 876 1. CR I SIL Equ it ies est im ate © CRISIL Limited.241 814 2.906 5.228 2.7 5.247) 1.6 8.054 4.839 1.5 FY10 10.039 2.350 5.3 1.158 16.669 446 22.8 3.8 32.726 3.414 11.214 3% 948 0% 15.9 27.8 4.4 3.427 187 2.5 0.505 2.4 FY10 FY11# FY09 16.7 1.447) (4.8 1.3 1.982 13.7 Q4FY11 6.015 675 1.339 (6) 1.021 (586) 750 (385) 1.069 1.8 32 44 38 51 1.459 490 969 (40) 1.2 36.0 Q3FY11 6.952) (1.8 57.069 618 16. tax) Others (incl extraordinaries) Net cash from financing C hange in cash position C losing cash 796 1.930 4.359 (470) 290 1.412 2.103 876 2.132 536 26.864) 1.203 624 16.117 1 9.037 8.5 3.162 1.0% 750 2.9 3.5 32.009 FY10 20.265 3.444 17. All Rights Reserved.531 (2.3 30.6 4.968 3.2 Q2FY11 5.203 10.4 124.3 30.197 302 (40) 1.829 0% 629 -19% 13.1 123.346 320 22.0% 496 496 26% 8.071 26.5% 4.799 FY11# 2.5 0.6 29.8 48.6 124.6 30 70 40 45 1.9 17.233 8% 883 40% 16.118 2.9 12.696 5.516) (1.982 6.4 2.7 2.7 22.749 (2.066 FY10 2.346 FY11# 26.980 26.3 136.9 14.132 9.444 1.1 10.2% 471 471 3% 7.095 8.839 Balance Sheet (Rs mn) Liabilities Equity share capital Reserves Minorities Net worth C onvertible debt Other debt Total debt Deferred tax liability (net) Total liabilities Assets Net fixed assets C apital WIP Total fixed assets Investments Current assets Inventory Sundry debtors Loans and advances C ash & bank balance Marketable securities Total current assets Total current liabilities Net current assets Intangibles/Misc.032 15.5% 3.

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