APOLLO HOSPITALS ENTERPRISE (=) : New beds to weigh on FY27 margins; Downgrade to Neutral

Research evidence excerpt

APOLLO HOSPITALS ENTERPRISE (=) : New beds to weigh on FY27 margins; Downgrade to Neutral

EQUITIES

MEDTECH & SERVICES

APOLLO HOSPITALS ENTERPRISE PRICE*NEUTRALINR8,079  TARGETFROMOUTPERFORMPRICE INR8,300 (UPSIDE 3%)

New beds to weigh on FY27 margins; Downgrade to Neutral

APHS’s 4QFY26 EBITDA beat BNPPe/BBGe by 11%/6%, led by a slight beat in revenue, better21 MAY 2026

Securities Research Report gross margins and lower 24x7 opex. Mgmt is confident about mid-teens growth in the hospital

Production time: 18:18* (London time) segment but retained their earlier guidance of INR1.5b loss from new beds in FY27 in addition to the

Research Analysts & Publishing Entities

INR414m loss in this quarter, which is reflected in the y-y decline in hospital EBITDA margins. We

Tausif Shaikh downgrade APHS to Neutral from O/P considering margin pressure in the hospital business in FY27.

BNP Paribas Securities India Private

Limited

+91 22 6196 4037 1,500+ proposed bed additions over the next 12-18 months to impact hospital margins

tausif.shaikh@asia.bnpparibas.com APHS has commenced 155 greenfield beds in FY26 across Pune, Kolkata and Hyderabad, resulting

in EBITDA loss of INR414m. With 670 more beds to be added in these 3 hospitals in FY27, along

with 150/400 beds in Bengaluru/Gurgaon, we expect an EBITDA hit of INR2b, slightly above

management’s guidance. We believe the peak impact on hospital margin will occur in 2HFY27 when

all greenfield hospitals are commercialised. Mgmt expects greenfield hospitals to breakeven in 12-

18 months. APHS is also exploring increasing its stake in Indraprastha hospitals.

24x7 breakeven on track; HealthCo demerger by 4QFY27E

24x7 digital cash loss reduced to INR164m in 4QFY26 (vs INR798m in 4QFY25) and is on course