COMPANY ANALYSIS

OF

APOLLO HOSPITAL

INVESTMENT ANALYSIS AND PORTFOLIO

MANAGEMENT

ASHWIN K

RA2252001040130

MBA 2nd year

1.1. COMPANY OVERVIEW

Apollo Hospitals is one of the largest and most well-known healthcare providers in India.
Founded in 1983 by Dr. Prathap C. Reddy, Apollo Hospitals has grown to become a
comprehensive healthcare conglomerate with a strong presence not only in India but also in
various other countries. Here is an overview of the company:
 Founding and Leadership: Dr. Prathap C. Reddy, a renowned cardiologist,
established the first Apollo Hospital in Chennai. Under his leadership, the
organization has expanded significantly over the years.
 Scope of Services: Apollo Hospitals provides a wide range of medical services,
including general and specialized medical care, surgical procedures, diagnostics, and
preventive healthcare.
 Facilities: The organization has a network of hospitals, clinics, and diagnostic centers
across India and abroad. These facilities vary in size and specialization, catering to
different medical needs. They often feature state-of-the-art equipment and technology.
 International Presence: Apollo Hospitals has expanded its reach internationally, with
hospitals and clinics in countries such as Bangladesh, Kuwait, Qatar, Oman, and the
Philippines. This international expansion has helped it become a global healthcare
brand.
 Specializations: Apollo Hospitals offers a range of specialized services, including
cardiac care, oncology, neurology, orthopedics, organ transplants, and more. It is
known for its expertise in various medical fields.
 Innovation: The organization is known for embracing cutting-edge medical
technology and research. It has been involved in medical research, clinical trials, and
the development of new healthcare solutions.
 Telemedicine: Apollo Hospitals has been a pioneer in telemedicine services, making
healthcare accessible to remote and underserved areas. It also launched the Apollo
Telemedicine Network, connecting patients with specialists through video
consultations.
 Patient-Centric Approach: Apollo Hospitals places a strong emphasis on patient
care and satisfaction, and it has earned a reputation for its customer-centric approach
to healthcare.
1.2. HISTORY OF APOLLO HOSPITAL:

1983 - Foundation: Apollo Hospitals was founded in Chennai, India, by Dr. Prathap C.
Reddy. The first Apollo Hospital was established in Chennai, marking the beginning of a
healthcare revolution in the country.
1985 - Apollo Health City: The first significant expansion occurred when Apollo Health
City, a multi-specialty healthcare complex, was established in Hyderabad.
1986 - Telemedicine Initiatives: Apollo Hospitals initiated its telemedicine program,
connecting remote areas with specialists in major cities, thus pioneering telemedicine in
India.
1988 - First Successful Heart Transplant: Apollo Hospitals achieved a major milestone by
performing the first successful heart transplant in India.
1996 - First International Venture: Apollo Hospitals expanded beyond India's borders by
opening its first international hospital in Dhaka, Bangladesh.
2000 - Accreditation and Awards: Apollo Hospitals received various accreditations and
awards, highlighting its commitment to quality healthcare.
2001 - Apollo Specialty Hospitals: The organization introduced Apollo Specialty Hospitals,
focusing on specialized medical services.
2003 - Apollo Telemedicine Network: The Apollo Telemedicine Network was launched,
further enhancing remote healthcare access.
2010 - International Expansion: Apollo Hospitals continued to expand internationally, with
new facilities in countries such as Kuwait and Qatar.
2013 - Landmark Achievements: The organization celebrated its 30th anniversary and
achieved several landmark medical milestones, including successful pediatric heart
transplants.
2014 - Apollo Proton Cancer Centre: Apollo Hospitals established the Apollo Proton
Cancer Centre, offering cutting-edge proton therapy for cancer treatment.
2015 - Digital Health Records: Apollo Hospitals introduced an electronic health records
system, enhancing patient care and data management.
2019 - Apollo HomeCare: Apollo Hospitals launched Apollo HomeCare to provide
healthcare services at patients' homes, extending its reach and services.
2020 - COVID-19 Pandemic Response: Apollo Hospitals played a significant role in the
healthcare response to the COVID-19 pandemic, including testing, treatment, and vaccination
efforts.
2021 - Continued Expansion and Innovation: Apollo Hospitals continued to expand its
network and invest in advanced healthcare technology, research, and patient care.
1.3 INDUSTRY BACKGROUND:

1.3.1. Industry Overview:

Apollo Hospitals operates in the healthcare and medical services industry, which is a crucial
sector dedicated to providing a wide range of healthcare services to individuals,
encompassing both general and specialized medical care. The company plays a prominent
role in this industry, with a strong presence in India and abroad.

Key elements of the industry overview for Apollo Hospitals include:

Healthcare Services: Apollo Hospitals is a leading player in the provision of comprehensive

healthcare services. These services encompass a broad spectrum of medical treatments,
including general health check-ups, diagnostics, surgical procedures, and specialized medical
care.

Medical Specializations: The company offers expertise in various medical specializations,

such as cardiac care, oncology, neurology, orthopedics, organ transplants, and more. It caters
to a diverse set of healthcare needs and is recognized for its exceptional proficiency in
multiple medical fields.

Advanced Technology and Equipment: Apollo Hospitals is at the forefront of incorporating

state-of-the-art medical technology and equipment, contributing to improved patient care,
diagnostics, and treatment.

International Presence: With hospitals and clinics in several countries, Apollo Hospitals has
a notable international presence. It actively participates in global healthcare, making it a
prominent player in the international healthcare industry.

Telemedicine and Digital Health: The organization is a pioneer in telemedicine, which has
revolutionized the accessibility of healthcare services, especially in remote areas. It has
embraced digital health records and telehealth, providing remote consultations and health
information management services.

Research and Innovation: Apollo Hospitals engages in medical research, clinical trials, and
the development of new healthcare solutions. This commitment to innovation helps advance
the industry's understanding and treatment of various medical conditions.

Patient-Centric Approach: Apollo Hospitals is known for its strong patient-centric

approach, prioritizing customer satisfaction, and providing holistic care.

Accreditations and Awards: Many of its facilities are accredited by international

organizations, reflecting their adherence to global standards of healthcare. The company has
received numerous awards and accolades for its contributions to the healthcare industry.
1.3.2. Market Trends and Drivers:

 Increasing Healthcare Awareness: Rising healthcare awareness among the Indian

population has led to greater demand for quality medical services. People are
becoming more proactive in seeking healthcare, including preventive care and
wellness services.
 Medical Tourism: India has become a hub for medical tourism due to the cost-
effectiveness and high-quality medical services offered by hospitals like Apollo.
International patients seeking affordable healthcare solutions have been a significant
driver of growth.
 Technological Advancements: Rapid advancements in medical technology, such as
telemedicine, electronic health records, and minimally invasive surgical techniques,
have improved patient care, accessibility, and the efficiency of healthcare delivery.
 Telemedicine and Digital Health: The COVID-19 pandemic accelerated the
adoption of telemedicine and digital health solutions. Apollo Hospitals has been at the
forefront of telemedicine in India, which has become a key driver for the
organization.
 Aging Population: India's aging population is driving the demand for healthcare
services, particularly in areas like geriatrics, orthopedics, and chronic disease
management.
 Specialized Medical Services: The increasing prevalence of complex medical
conditions has driven the demand for specialized healthcare services. Apollo
Hospitals, with its wide range of specialized departments, is well-positioned to cater
to these needs.
 Health Insurance Penetration: As health insurance coverage in India has increased,
more individuals can afford comprehensive healthcare services, boosting the
customer base for hospitals like Apollo.
 International Expansion: Apollo Hospitals' international expansion has allowed the
organization to tap into growing healthcare markets in countries like Bangladesh,
Kuwait, and Qatar.
 Corporate Partnerships: Collaborations with multinational corporations and
government agencies for healthcare services have been a significant driver for growth
and expansion.
 Pandemic Response: The response to the COVID-19 pandemic underscored the
importance of healthcare infrastructure and emergency preparedness. Apollo
Hospitals played a crucial role in providing testing, treatment, and vaccination
services during the pandemic.
1.3.3. Competitive Landscape:

 Fortis Healthcare: Fortis Healthcare is one of Apollo's major competitors in the

Indian healthcare industry. It operates a network of hospitals and healthcare facilities
across India, providing a range of medical services.
 Max Healthcare: Max Healthcare is another prominent healthcare provider in India.
It offers a wide spectrum of healthcare services, including specialized treatments and
surgeries.
 Narayana Health: Narayana Health is known for its focus on affordable healthcare
services. It has a significant presence in the Indian healthcare market and operates
multi-specialty hospitals.
 Columbia Asia Hospitals: Columbia Asia is an international healthcare chain with
hospitals in various countries, including India. They offer a range of medical services
and specialize in providing international standards of care.
 Manipal Hospitals: Manipal Hospitals is a leading healthcare group in India with a
comprehensive network of hospitals and clinics, offering both general and specialized
healthcare services.
 Aster DM Healthcare: Aster DM Healthcare is a global healthcare company with a
strong presence in India and the Middle East. It operates hospitals, clinics, and
pharmacies, offering a wide range of healthcare services.
 Global Hospital: Global Hospital, part of the Gleneagles Global Hospitals Group, is
known for its expertise in multi-organ transplants and critical care.

1.3.4. Future Outlook:

The benefits from these were impacted due to the lockdown in April-May. The lockdown-led
disruptions meant postponement of elective surgeries by patients and suspended outpatient
services. Now with normalization, the firm is expected to report good growth. The metrics
are already showing improvement. Hospital bed occupancy had improved to 56% in the
September quarter (Q2). Analysts said that this will continue to rise and is likely to normalize
further by March 2021. Meanwhile, the confidence in the company’s pharmacy business has
increased as well. This was the least impacted part for the firm and has been a cushion in
tough quarters.
This segment had seen 15% year-on-year growth during the September quarter, while
matured hospital revenues had declined 24% year-on-year. The traction could also have been
aided by a change in consumption patterns and service demand during the pandemic.
Sustainability of growth and trajectory of margins would be closely watched.
Analysts expect standalone pharmacy additions, rising sales of private labels (own brands),
separation of pharmacy front-end business, focus on online pharmacy business to continue
driving growth, and helping margin expansions.
That said, when it comes to valuations, most of the positives seem to have been priced in.
Meanwhile, the company is exploring inorganic growth opportunities, but has said it would
go slow on greenfield expansion. The move towards acquisition would be keenly watched by
investors. At ₹2,408.95 apiece, the stock is trading at 56 times one-year forward earnings
estimates.
Notwithstanding the potential acquisition plans, analysts believe the valuations are not cheap.

2.OPERATIONAL EFFICIENCY:

 Clinical Pathways: Apollo Hospitals typically follows established clinical pathways

and best practices to ensure standardized and efficient care for patients. These
pathways are evidence-based and help streamline treatment processes.
 Advanced Technology: The organization invests in state-of-the-art medical
equipment and healthcare information systems. This technology improves diagnostic
accuracy, treatment efficiency, and patient data management.
 Telemedicine: Apollo Hospitals has been a pioneer in telemedicine, which allows for
remote consultations and follow-ups, reducing the need for in-person visits and
improving accessibility, especially in remote areas.
 Digital Health Records: Digital health records help in efficient patient data
management and retrieval. This enhances the continuity of care and reduces
paperwork, leading to streamlined operations.
 Supply Chain Management: Effective supply chain management is crucial in a
healthcare setting. Apollo Hospitals employs inventory management systems to
ensure a consistent supply of medical equipment and pharmaceuticals.
 Patient Flow and Bed Management: To optimize patient flow and bed utilization,
Apollo Hospitals typically implements bed management systems. This helps ensure
timely admissions and discharges, reducing wait times and enhancing patient
satisfaction.
  Training and Development: Continuous training and development of healthcare
professionals help maintain high standards of care and operational efficiency. Staff
members are regularly updated on the latest medical practices and technologies.
 Lean Principles: Lean management principles are often employed to eliminate waste
and improve operational efficiency. This includes streamlining processes, reducing
unnecessary steps, and improving resource utilization.
 Quality Control and Accreditation: Apollo Hospitals typically follows stringent
quality control standards and pursues various national and international accreditations.
This ensures that the organization adheres to high-quality care standards.
 Patient-Centric Approach: Apollo Hospitals' focus on delivering patient-centric care
enhances the overall patient experience and contributes to operational efficiency by
reducing errors and enhancing communication.
 Cost Management: Efficient cost management is essential in healthcare. Apollo
Hospitals typically focuses on cost optimization without compromising the quality of
care, which is achieved through economies of scale and efficient resource allocation.

3.1 MANAGEMENT EFFICIENCY:

Dr. Prathap C. Reddy (Founder): Dr. Prathap C. Reddy, the founder of Apollo Hospitals, is
a visionary leader in the healthcare industry. His leadership, strategic vision, and commitment
to providing high-quality healthcare services have been instrumental in the organization's
growth and success.

Ms. Suneeta Reddy (Managing Director): Ms. Suneeta Reddy, the daughter of Dr. Prathap
C. Reddy, serves as the Managing Director of Apollo Hospitals. She plays a vital role in the
day-to-day management of the organization, overseeing various aspects of its operations and
expansion.

Top Management Team: Apollo Hospitals has a dedicated and experienced top management
team comprising executives with expertise in healthcare management, operations, finance,
and other critical areas. Their collective efforts contribute to the organization's overall
efficiency.

Clinical Leadership: Highly skilled medical professionals and specialists lead various
clinical departments within Apollo Hospitals. These individuals are responsible for
maintaining high medical standards, implementing best practices, and ensuring clinical
efficiency.

Technology and Innovation Experts: Apollo Hospitals employs experts in healthcare

technology and innovation who play key roles in adopting and implementing advanced
medical technology and digital health solutions. Their efforts contribute to operational
efficiency and improved patient care.

Hospital Administrators: Skilled administrators and managers oversee the day-to-day

operations of individual hospitals and healthcare facilities within the Apollo network. Their
efficient management of resources, staff, and patient services is essential for smooth
operations.
4.1 EARNINGS AND PROFITABILITY:

 Shares of Apollo Hospitals have surged 178% in the last one year and 103% so far in
2021.
 The healthcare company reported a net profit of ₹489 crore in the June quarter as
against a loss of ₹208 crore last year.
 Analysts remain positive on the stock and believe the company will continue to witness
healthy growth verticals.
Shares of Apollo Hospitals have more than doubled in the last one year as the company has
delivered strong financial performance.
The Chennai-based healthcare company is known for its chains of hospitals across the
country.
The company reported a June quarter net profit of ₹489 crore on Friday as against loss of
₹208 crore last year. The stock has gained 16% since Monday.

A report by HDFC Securities says that the company has seen robust growth across business
segments. “Despite COVID, the core hospital business posted a strong trend and it is likely to
witness healthy growth...Its diagnostics business continues to see steady ramp-up and it is on
track to achieve ₹5 billion revenue by FY23,” said the broking firm while maintaining ‘ADD’
rating on the company’s stock.
Analysts at ICICI direct stated that the company’s performance was better than estimates led
by strong recovery in occupancies along with average revenue per occupied bed (ARPOB),
stockpiling by pharmacy customers during the second COVID-19 wave and incremental
revenue from vaccination.
Healthcare chain Apollo Hospitals Enterprise Ltd on Tuesday reported a 33.3 percent year-on-year
(YoY) decline in net profit at Rs 162.3 crore for the third quarter that ended December 31, 2022. n
the December quarter, total revenue stood at Rs 4,263.6 crore during the period under review, up
17.2 percent against Rs 3,638.9 crore in the corresponding period of the preceding fiscal. CNBC-
TV18 Polls had predicted revenue of Rs 4,298.4 crore for the quarter under review. At the
operating level, EBITDA declined 13.9 percent to Rs 505.4 crore in the third quarter of this fiscal
over Rs 587 crore in the corresponding period in the previous fiscal. EBITDA margin stood at
11.9 percent in the reporting quarter as compared to 16.1 percent in the corresponding period in
the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortisation. The
board of Apollo Hospitals has declared an interim dividend of Rs 6 per share. As on December
31, 2022, Apollo Hospitals had 7,855 operating beds across the network.

5.1 SOLVENCY AND SUSTAINABILITY:

Solvency:
 Healthy Financial Statements: Apollo Hospitals, being a publicly traded company,
regularly published its financial statements. A healthy balance sheet, with assets
significantly exceeding liabilities, is a sign of solvency. The company's financial
reports, including ratios like debt-to-equity ratio, provide insights into its solvency.
 Credit Ratings: Companies often have credit ratings assigned by credit rating
agencies. Higher credit ratings indicate lower credit risk. These ratings can provide an
overview of the company's ability to meet its financial obligations, including debt
repayment.
 Cash Flow Management: Efficient management of cash flow is crucial for solvency.
Regular positive cash flows, especially from core operations, indicate that the
company has enough liquidity to meet its short-term obligations.
Sustainability:
 Diversified Revenue Streams: Having revenue streams from various sources, such
as different medical services and geographical locations, can enhance sustainability. It
reduces dependency on specific sectors or regions.

 Cost Management: Effective cost management, including controlling operational

expenses, can improve the company's sustainability by ensuring profitability even in
challenging market conditions.

 Investments in Technology and Innovation: Companies that invest in innovative

healthcare technologies tend to stay relevant and competitive. Such investments can
enhance sustainability by attracting more patients and revenue.

 Market Leadership and Reputation: A strong market position and a good

reputation can lead to patient trust and loyalty, ensuring a steady flow of customers
and revenue over the long term.

 Adaptability to Regulatory Changes: Healthcare regulations can change, affecting

revenue streams. Hospitals that can adapt swiftly to these changes are more likely to
maintain sustainability.

 Community Engagement and CSR: Active involvement in community programs

and Corporate Social Responsibility (CSR) initiatives not only contribute positively
to society but also enhance the hospital's reputation, which can impact long-term
sustainability.

 Strategic Partnerships and Collaborations: Collaborations with other healthcare

providers, research institutions, or pharmaceutical companies can open new avenues
and enhance the hospital's sustainability through shared resources and knowledge.
BALANCE SHEET OF APOLLO HOSPITAL
5.2. FINANCIAL RATIOS:
5.3 CASHFLOW STATEMENT:

5.4 COMPETITIVENESS:

Reputation and Brand: Apollo Hospitals has established a strong reputation for delivering
high-quality healthcare services. The brand is synonymous with excellence in healthcare in
India and beyond, which gives it a competitive edge.

Network and Infrastructure: Apollo Hospitals has a vast network of hospitals and clinics
across India and in other countries. This extensive infrastructure allows them to reach a wide
customer base and provide a range of services.

Medical Expertise: The hospitals have a team of highly skilled doctors, specialists, and
healthcare professionals. Their expertise and experience in various medical fields are a key
factor in their competitiveness.

Technology and Innovation: Apollo Hospitals has been at the forefront of adopting
advanced medical technologies and practices. They invest in the latest medical equipment
and innovation, which attracts patients looking for cutting-edge treatments.

Quality of Care: The organization is known for delivering quality healthcare services, which
is a critical factor in attracting and retaining patients. They are accredited by national and
international healthcare quality organizations.

Medical Tourism: Apollo Hospitals has been successful in attracting medical tourists from
around the world. The quality of care and the relatively lower cost of medical procedures
compared to Western countries make them a competitive choice for international patients.
5.5 SWOT ANALYSIS OF APOLLO HOSPITAL:

Strengths:

Reputation and Brand: Apollo Hospitals has a strong reputation and brand recognition in
the healthcare industry, both in India and internationally.

Extensive Network: It boasts an extensive network of hospitals, clinics, and healthcare

facilities, providing broad access to healthcare services.

Medical Expertise: Apollo Hospitals has a highly skilled and specialized team of doctors
and healthcare professionals, contributing to the quality of care.

Advanced Technology: The organization invests in state-of-the-art medical equipment and

technologies, ensuring access to cutting-edge treatments and diagnostics.

Weaknesses:

Cost of Care: While they offer quality services, the cost of healthcare at Apollo Hospitals
can be relatively high for some segments of the population.

Capacity Issues: Some of their facilities may face capacity constraints, resulting in longer
wait times for certain procedures and services.

Regulatory Challenges: The healthcare industry in India faces regulatory challenges that can
affect operations and expansion.

Opportunities:

Expanding Network: Growth opportunities in India and abroad by expanding the network of
hospitals and clinics.

Rising Medical Tourism: The trend of medical tourism is growing, and Apollo Hospitals can
further tap into this market.

Telehealth Expansion: The growing acceptance of telehealth and digital health solutions can
help Apollo reach more patients.

Threats: Regulatory Changes: Changing government regulations and policies can impact
healthcare operations and reimbursements.

Competition: Intense competition from other hospital chains and independent healthcare
providers can lead to a market share squeeze.

Economic Factors: Economic downturns or financial crises can affect healthcare utilization
and affordability for patients.