{"id":639,"date":"2020-01-21T11:24:09","date_gmt":"2020-01-21T11:24:09","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=639"},"modified":"2020-01-21T11:24:11","modified_gmt":"2020-01-21T11:24:11","slug":"focus-on-medical-value-travel-in-the-union-budget-suneeta-reddy-md-apollo-hospitals","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2020\/01\/21\/focus-on-medical-value-travel-in-the-union-budget-suneeta-reddy-md-apollo-hospitals\/","title":{"rendered":"Focus on medical value travel in the Union Budget- Suneeta Reddy, MD, Apollo Hospitals"},"content":{"rendered":"\n<p><strong>Update\non the Indian Equity Market:<\/strong><\/p>\n\n\n\n<p>After a volatile session, the Nifty closed 1 percent lower at 12231. This decline was the biggest in three months. The Nifty Realty (+0.4%) was the only sectoral index which ended the day in the positive. Nifty Media (-1.9%), Nifty PSU Bank (-1.6%), Nifty Pvt Bank (-1.6%) and Nifty Bank (-1.6%) were amongst those that ended in the red. Powergrid (+3.0%), Infratel (+1.6%) and Bharti Airtel (+1.4%) were the top gainers. Kotak Bank (-4.8%), Zee Entertainment Enterprises (-4.2%) and IOC (-4.1%) were the top stocks that ended in the negative. <\/p>\n\n\n\n<p><strong>Focus on medical value travel in the Union\nBudget- Suneeta Reddy, MD, Apollo Hospitals<\/strong><\/p>\n\n\n\n<p>Excerpts from an interview with Ms Suneeta\nReddy, MD, Apollo Hospitals published in Livemint on 20<sup>th<\/sup> January\n2020:<\/p>\n\n\n\n<ul><li>The utilization of proceeds from Apollo Munich\ntransaction is definitely going to debt reduction. The stake sale proceeds\nreceived by the family after-tax is \u20b9 980 crore and Apollo will get around \u20b9\n250 crore.<\/li><li>They will end the quarter in January with 28%\npromoter pledging and over the next two years, hope to bring it down to 10%.\nThe cash flows from the education vertical will help bring down the pledge. The\nfree cash flows from the education segment will help reduce the debt, so there\nwon\u2019t be a need for further promoter stake sale. <\/li><li>Gross debt will be around \u20b9 2,900 crore and\nnet debt will be around \u20b9 2,500 crore this year.<\/li><li>The process of restructuring the pharmacy business\nis expected to happen in the next three months and it would generate \u20b9 300\ncrore.<\/li><li>Although the focus is on debt reduction, the\nfocus will also be on consolidating the assets and improving asset utilization.\nThe replacement capex is about \u20b9 250 crore.<\/li><li>They currently operate at 8.5% margin levels\nand are hoping to move to 14% over the next two quarters.<\/li><li>The new hospitals are operating at 21% EBITDA\nmargin which is expected to move up 100 basis points (bps), through improvement\nin the quality of revenue. An 8% volume growth in this region is also expected.<\/li><li>There has been a growth of 22-24% in the\npharmacy business. The EBITDA margin, currently at 5.4% are expected to improve\non the back of new store additions and the old stores maturing.<\/li><li>Moving to the clinic segment which turned\nprofitable for the first time in Q2, the 250 diagnostic centres will drive the\ngrowth in this segment, and will contribute to Apollo Hospital\u2019s bottom-line.<\/li><li>The proton therapy segment, which is the first\nfacility opened in South East Asia, will break even in the second year. Having\nfinished 100 patents, there is a waiting list of patients and about 30 percent\nof the patients are overseas patients.<\/li><li>12% of revenues of Apollo Hospitals comes from\nforeign patients. Since the budget is around the corner, she believes the focus\nwill be to help hospitals and improve their margins. The focus will also be on\ninfrastructure spending and there might be some incentives for hospitals to put\nup new infrastructure or add to the existing facilities.<\/li><\/ul>\n\n\n\n<p><strong>Consensus Estimate (Source: market screener website)<\/strong><\/p>\n\n\n\n<ul><li>The closing price of Apollo Hospitals as on\n20-January-2020 was \u20b9 1632\/-. It traded at 61.6x \/ 45.3x \/ 32x the consensus\nEPS estimate for FY20E\/21E\/22E of \u20b9 26.5\/ 36.0 \/51.1 respectively.<\/li><li>Consensus target price of \u20b9 1667\/- implies a\nPE multiple of 32.6x on FY22E EPS of \u20b9 51.1.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Update on the Indian Equity Market: After a volatile session, the Nifty closed 1 percent lower at 12231. This decline was the biggest in three months. The Nifty Realty (+0.4%) was the only sectoral index which ended the day in the positive. Nifty Media (-1.9%), Nifty PSU Bank (-1.6%), Nifty Pvt Bank (-1.6%) and Nifty [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[167],"tags":[261,260,264],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/639"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=639"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/639\/revisions"}],"predecessor-version":[{"id":640,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/639\/revisions\/640"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=639"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=639"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=639"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}