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All Three Segments Ready to Soar: APHS hospital segment is set to deliver steady growth, driven by capacity expansion (from current capacity of 10,187 to 14,560 beds over the next 3-4 years) and a sustained EBITDA margin of ~24%. AHLL (diagnostic) targets 15–18% revenue growth with ~200 bps margin enhancement, with a focus on primary care and diagnostics. APHS HealthCo (pharmacy) aims for ~20% revenue CAGR, led by deeper penetration into highpotential emerging cities

View and Valuation:

We expect revenue/EBITDA/PAT to grow at a CAGR of 18.4%/25.6%/37.5% over FY25-27E. We have revised our EPS FY26/FY27 estimates upwards by 16.2% and 28%, respectively, and we maintain our 'BUY' rating with a target price of INR 8,000 (changed from INR 7,520) for FY27, based on a SoTP valuation, valuing hospitals at 20x EV/EBITDA, AHLL at 10x EV/EBITDA, and HealthCo at 3x EV/EBITDA (refer Exhibit 2).

* Hospital segment revenue is expected to grow through capacity expansion, with plans to add ~43% more beds to the existing bed capacity (10,187 beds),

* The pharmacy business is set to achieve 20% yearly revenue growth, by expanding footprint from 6 major cities to 25 cities,

* The diagnostics business is projected to grow at a CAGR of 15–18%, supported by strategic alliances with insurers.

Revenue was in line with estimate, but marginal miss on EBITDA margin

* Revenue came at INR 55.9 Bn (vs consensus est. at INR 56.2 Bn), up 13.1% YoY and 1.2% QoQ, driven by higher better case mix.

* Highest-ever quarterly ARPOB came at INR 63,569, up 6.8% YoY and up 4.5% QoQ, while occupancy came at 67% from 65% in Q4FY24 and 68% in Q3FY25.

* EBITDA came at INR 7.7 Bn (vs consensus est. at INR 7.8 Bn), up 20.2% YoY and 1.1% QoQ. EBITDA margin came at 13.8% (vs consensus est. of 14.0%). ? PAT came at INR 3.9 Bn (vs consensus est. of INR 3.7 Bn), up 53.5% YoY and 4.6% QoQ, with a PAT margin of 7%.

Metro focused capacity expansion plan (adding ~20% of current capacity in FY26)

Apollo is set to add 1,937 beds in FY26, ~20% of its current capacity— focusing on high-growth markets such as Pune, Kolkata, Delhi, Hyderabad, and Gurugram. With strong execution, new hospitals—particularly Kolkata (270 beds) and Delhi (510 beds), are expected to achieve EBITDA breakeven within 12 months, supported by Apollo’s established presence. The strategic roadmap includes a addition of 4,372 beds over the next 3–4 years. This expansion prioritizes high-margin specialties such as oncology, neurosciences, and cardiac sciences, driving revenue growth. Inpatient volumes are projected to grow 6–7% annually, supporting ARPOB growth and sustaining strong EBITDA margins at 24%.

Diagnostics & Pharmacy: Scaling with Profitability and Digital Leverage

Apollo’s diagnostics and pharmacy segments are positioned for robust growth, with diagnostics targeting a 15–18% revenue CAGR and pharmacy poised to grow at 20% annually. Strategic alliances with insurers are expected to enhance profitability and support operating leverage. We expect that the pharmacy business is on track to reach a 5-6% EBITDA margin by FY27, while diagnostics business is aiming for a 200bps improvement to ~10%. Expansion plans include scaling operations from the current 6 core markets which is accounting for 80% of pharmacy revenue—to 25 high-potential cities over the next 2 years.

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