Apollo Hospitals mulls acquisitions in northern India to expand

Chennai: Apollo Hospitals Enterprise Ltd., India’s largest healthcare provider by market value, is considering acquisitions in northern India in a bid to counter rival Fortis Healthcare Ltd.’s foray in the country’s south.

The specialty chain is looking to purchase a facility in Mumbai that delivers at least 20% return on capital and one that fetches significant market share, managing director Suneeta Reddy said in an interview at her office in Chennai.

“In the cities we do not have a presence, we will look at acquisitions for sure,” she said. “We do believe that we are strong in the south. We probably need to look at something in the north that would add value.”

Apollo, which runs 64 hospitals, is in the midst of a ₹ 1,600 crore ($251 million) expansion program to add 1,590 beds and eight health-care facilities in the next two years. Locked in a battle for market share in the world’s second-most populous country is the New Delhi-based Fortis, which according to its website, has 54 centers and 10,000 beds globally.

“We’ve always said we will pursue organic and inorganic growth,” Reddy said. “We will look at every opportunity that comes to us if we find the right valuation and if we believe it will add value to what we are doing currently.”

Her company has already spent ₹ 600 crore to meet part of the expansion program, she said.

Share rally

Shares of Apollo have advanced 42% in the past year to ₹ 1,285.90, compared with a 62% rally for Fortis. The benchmark S&P BSE Sensex gained 14% in the same period.

Net profit in the quarter ended 31 December rose 14% from a year earlier to ₹ 95 crore for Apollo, while revenue in the period jumped 19% to ₹ 1,180 crore, according to data compiled by Bloomberg. Total debt as of 30 September stood at ₹ 1,330 crore rupees.

“I can raise capital if warranted, and our balance sheet can take it,” she said, referring to any planned acquisition.

Shivinder Mohan Singh, who as executive vice chairman runs Fortis along with his brother Malvinder Mohan Singh, said in a February conference call that his company is adding hospitals and expanding its existing facilities in Chennai and Bengaluru, formerly Bangalore.

Apollo built its first hospital in Chennai and the city is considered to be its bastion. Bloomberg