Shares of Apollo Hospitals ended the day over 5% higher at around ₹5,153 as prominent brokerages Morgan Stanley and BofA initiated coverage on the stock.
Morgan Stanley is "overweight" on the stock with a target price of ₹6,101. Their analysis projects a robust EBITDA (earnings before interest, tax, depreciation, and amortisation) CAGR (compound annual growth rate) of 31% from FY24 to FY26. They peg the return on capital at around 21% by FY26.
According to Morgan Stanley, the key growth drivers will include a substantial 18% CAGR expansion in hospital services EBITDA from FY24 to FY26. Additionally, they anticipate a narrowing of losses in 24/7 e-healthcare services, moving toward breakeven by FY26.
BofA Securities initiated coverage with a "buy" rating and a target price of ₹6,000. They view Apollo Hospitals as an all-in-one healthcare opportunity.
They see earnings momentum stemming from the hospital and Healthco reaching breakeven as significant triggers for growth.
A note from BofA highlighted the potential for a revaluation based on Apollo's omnichannel arm, Healthco's growth prospects, indicating that current valuations are trading at a premium compared to the five-year averages.
This premium reflects increased margin visibility and an improved balance sheet, which provides strong support for future expansion endeavours.
Shares of Apollo Hospitals have remained flat over the past month.
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(Edited by : Shweta Mungre)
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