Apollo Hospitals Shares Drop 4% to Six-Month Low Despite Strong Q3 Performance – Here’s Why
Shares of Apollo Hospitals Enterprise Ltd. fell 4.5% in intraday trading on Tuesday, February 11, reaching a six-month low of ₹6,460 per share. This decline came despite the company reporting solid Q3 FY25 results that met analysts’ expectations.
Q3 FY25 Financial Performance – Strong Growth Across Segments
Apollo Hospitals reported 14% year-on-year (YoY) revenue growth for the December quarter, with total revenue reaching ₹5,527 crore.
- Healthcare Services (HCS) contributed ₹2,785 crore, growing 13% YoY.
- Apollo Health & Lifestyle Limited (AHLL) recorded ₹390 crore in revenue, up 15% YoY.
- Apollo HealthCo (which includes pharmacy distribution and digital health services) reported revenue of ₹2,352 crore, also up 15% YoY.
- The gross merchandise value (GMV) of its digital platform Apollo 24/7 stood at ₹760 crore.
On the profitability front, EBITDA (earnings before interest, tax, depreciation, and amortization) grew 24% YoY to ₹762 crore, with the following segment-wise contributions:
- HCS EBITDA: ₹671 crore (+14% YoY)
- AHLL EBITDA: ₹34 crore (+32% YoY)
- Apollo HealthCo EBITDA: ₹57 crore
Net profit after tax (PAT) surged 52% YoY to ₹372 crore, compared to ₹245 crore in Q3 FY24.
As of December 31, 2024, Apollo Hospitals had 7,996 operational beds across its network, with occupancy rates improving to 68% from 66% in the same period last year.
Why Did Apollo Hospitals’ Stock Decline?
Despite the strong financial performance, the stock fell due to:
- Profit Booking: After a sharp rally between June 2022 and December 2024, which saw Apollo Hospitals’ stock double in value, some investors likely decided to book profits. The stock has declined 10% in less than two months.
- Weak Sentiment in the Hospital Sector: Other healthcare stocks also faced selling pressure.
- Max Healthcare shares were down 3%.
- Yatharth Hospital, Narayana Hrudayalaya, and Rainbow Children’s Medicare fell 3-4% each.
- Adani Group’s Entry into Healthcare: Investor sentiment was further impacted by Adani Group’s announcement of a ₹6,000 crore investment to set up two large affordable healthcare campuses in Mumbai and Ahmedabad. This move signals increased competition in the hospital industry.
Expansion Plans and Future Outlook
Despite the recent stock decline, Apollo Hospitals remains optimistic about its long-term growth.
- The company is on track to add 3,512 beds over the next 3-4 years, starting FY26.
- It has successfully performed over 1,000 robotic cardiac surgeries in Bangalore and Chennai.
- Apollo has partnered with Microsoft to advance AI-driven healthcare solutions, focusing on disease progression and genomics.
Chairman Prathap C. Reddy expressed confidence in the company’s mission, stating:
“From Mumbai to Varanasi and Chennai to Gurugram, we are committed to ensuring that quality healthcare is not a privilege but a fundamental right for all.”
Interim Dividend Announcement
Apollo Hospitals declared an interim dividend of ₹9 per share (180% of the face value of ₹5 per share) for FY25. The record date for dividend eligibility is February 15, 2025.
Stock Performance & Historical Returns
- Market Cap: ₹91,614 crore
- Current Price: ₹6,372
- 52-Week High/Low: ₹7,545 / ₹5,691
- 1-Year Return: +28%
- 7-Year Return: +417%
Key Financial Ratios (Q3 FY25)
| Metric | Value |
|---|---|
| Stock P/E | 69.9 |
| Industry P/E | 56.3 |
| Book Value | ₹522 |
| Price to Book Value | 12.2 |
| Return on Capital Employed (ROCE) | 15.1% |
| Return on Equity (ROE) | 13.3% |
| Debt to Equity Ratio | 0.98 |
| Total Debt | ₹7,371 crore |
| Dividend Yield | 0.24% |
| PEG Ratio | 2.04 |
| Intrinsic Value | ₹1,342 |
| Graham Number | ₹1,034 |
| Piotroski Score | 6.00 |
Conclusion – A Temporary Dip or a Buying Opportunity?
Apollo Hospitals’ recent stock decline appears to be driven by profit booking and sector-wide weakness rather than fundamental concerns. The company’s strong financials, expansion plans, and digital healthcare initiatives indicate long-term growth potential.
For investors, the current dip may present a buying opportunity, especially for those with a long-term perspective on India’s healthcare sector. However, short-term traders should be mindful of market sentiment and potential volatility.
Would you consider investing in Apollo Hospitals after this correction? Let us know in the comments!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.