Multiple triggers likely to help Apollo find its pulse

New hospitals, operational gains point to a healthier performance

- RAM PRASAD SAHU

The stock of the country’s largest listed hospital company, Apollo Hospitals Enterprise (AHEL), has been underperforming its large and midcap hospital peers over the past year.

The stock has delivered a return of 7 per cent during this period and is trading at 7,643. In comparison, the average returns of its peer group are upwards of 30 per cent. Except for Max Healthcare, which has generated 10 per cent returns, most other hospital networks have gained over 21 per cent during this period.

The underperformance was due to higher losses in Apollo 24/7, moderate growth in its core hospital segments, and valuation concerns related to the stake sale in Apollo HealthCo in April last year. Last year, Advent International picked up a 12.1 per cent stake in Apollo HealthCo (which includes Apollo 24/7 and pharmaceutical distribution entity Keimed), valuing the entity at %22,481 crore. The lower-than-expected valuations of Apollo 24/7 disappointed the Street.