Apollo Hospitals stock jumps 4% on stellar Q1 performance; Is it right time to buy?

Shares of the leading hospital chain Apollo Hospitals surged by 4 per cent, reaching a day's high of ₹6,864.95 on the BSE, on Wednesday's trading session. This increase followed the company's announcement on Tuesday of a net profit of ₹305 crore for the first quarter ended June 2024, compared to ₹167 crore in the same period last year.

The company’s revenue from operations for the reporting period rose by 15 per cent year-on-year (YoY) to ₹5,086 crore, compared to ₹4,418 crore in the same quarter last year.

Revenue from healthcare services increased by 15 per cent year-over-year, reaching ₹2,637 crore. The segment's EBITDA also saw a 15 per cent rise, amounting to ₹622 crore. Additionally, the segment's Profit After Tax (PAT) grew by 24 per cent YoY, totaling ₹328 crore.

The diagnostics and retail health segment of the company also outperformed compared to the same period last year. Apollo Health and Lifestyle Ltd’s revenue increased by 15% year-on-year in the June quarter, while its losses reduced to ₹14.8 crore from ₹21.4 crore a year earlier.

The digital health and pharmacy distribution business achieved a positive EBITDA in Q1FY25, recording an operating profit of ₹22.5 crore, a significant improvement from the ₹56.6 crore loss in Q1FY24, driven by cost optimization and a 15% year-over-year revenue growth. However, the company still reported a net loss of ₹12.9 crore, an improvement from the ₹82.6 crore loss recorded in the same period last year.

Should you buy?

Brokerage firm JP Morgan has maintained ‘overweight’ rating to Apollo Hospitals stock, with a target price of ₹6,800. “Q1 results met expectations, with a notable increase in occupancy. While weak ARPOB growth, moderate GMV growth for Apollo 24/7, and margin declines were key negatives, the positives included strong revenue growth across segments and a significant improvement in occupancy,” the brokerage firm said in a note.

The stock has surged more than 41% in the past year. However, it has underperformed recently, with its price staying flat over the last six months.