The broking firm Jefferies has raised the target price on the stock of Apollo Hospitals to Rs 7,500 from 6,630, earlier, an increase of 13%. The brokerage has kept the rating unchanged to “Buy”. It believes that the company has remained committed to increasing occupancy in hospitals to 70%.
Also, it has raised the operating profit estimated by 6% for FY26 on 24/7 breakeven. However, cut the FY25 operating margin by 1% on the back of the “lower hospital margin assumptions.” The company reported an operating margin of Rs 610 crore in the third quarter of the current financial year, an increase of 21% year-on-year.
The company’s management believes the operating margin will be improved by 200 basis points in the near term.
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According to the brokerage, the investment thesis is based on the company’s increasing occupancy in existing hospitals, high growth in pharmacy, and margin accretion on existing hospital beds.
In the base case, Jefferies believes the company’s revenue to grow by 14% over the next two years.
On the risk front, the brokerage sees lower occupancy levels in hospitals, slower growth in the business of pharmacy, “and higher than guided investment in Apollo 24/7.”
