Apollo Hospitals delivers broad Q1 FY27 growth as bed expansion accelerates

Investment View and Business Overview

ICICI Direct Research’s August 14, 2026 result update maintains its BUY view on Apollo Hospitals, with a target price of Rs 10,170 versus the current market price of Rs 8,800. The broker describes Apollo as a leading integrated healthcare provider with around 11,147 beds across 48 owned and six managed hospitals.

Apollo’s other businesses include Apollo HealthCo, an omni-channel healthcare platform with around 7,440 offline pharmacies and Apollo 24X7’s digital network of more than 4.9 crore registered users. Apollo Health & Lifestyle Limited (AHLL) operates primary healthcare, diagnostics, specialty and Apollo Spectra formats.

Broad-Based Q1 FY27 Performance

Apollo Hospitals reported broad-based growth in Q1 FY27. Consolidated operating income increased 20.6 per cent year-on-year and 6.6 per cent quarter-on-quarter to Rs 7,043.5 crore. EBITDA rose 28.2 per cent year-on-year to Rs 1,092.1 crore, while EBITDA margin expanded 92 basis points year-on-year to 15.5 per cent. Adjusted PAT grew 38.4 per cent year-on-year to Rs 610.4 crore.

The broker attributes the margin improvement to better profitability in AHLL and HealthCo, despite losses in newly commissioned hospitals.

Hospital Services: Volume, Mix and Pricing Support Growth

The hospital services division delivered revenue growth of around 21 per cent year-on-year to Rs 3,567 crore. Inpatient volume increased 13 per cent, with the balance of growth coming from pricing and case-mix improvement. Hospital EBITDA rose 20 per cent and the margin was 24.2 per cent.

Management said average revenue per inpatient increased 8 per cent to Rs 1,86,630, supported by greater case complexity, an 85 per cent increase in robotic surgeries and increased volumes of life-saving procedures. International patient revenue grew 26 per cent year-on-year. Occupancy was 70 per cent overall and 72 per cent in established hospitals, while established-unit EBITDA margin was around 25.9 per cent.

New Hospital Expansion and Outlook

New hospital losses were Rs 37.5 crore in Q1 FY27 because of fixed costs on commissioned beds. Management retained its full-year new-unit loss guidance of around Rs 150 crore. The operational cluster of 380 new beds generated Rs 92 crore of revenue in Q1 FY27 and is expected to break even in Q3 to Q4 FY28.

Apollo expects the Gurgaon hospital to open in October 2026, with meaningful revenue contribution from Q4 FY27. The company plans to add more than 4,330 beds across India over four to five years, involving spending of over Rs 11,150 crore, of which Rs 3,650 crore had already been incurred.

Management guided for FY27 revenue growth of 18-20 per cent. This comprises 13-14 per cent growth at established hospitals, including 7-8 per cent volume growth, and around 7 per cent contribution from newer hospitals.

Apollo HealthCo: Pharmacy and Digital Business Progress

Apollo HealthCo revenue grew around 20 per cent year-on-year to Rs 2,977 crore, led by 22 per cent growth in offline pharmacy distribution to Rs 2,629 crore. Online pharmacy distribution and Apollo 24X7 revenue grew around 13 per cent to Rs 348 crore.

HealthCo’s digital-business cash loss was Rs 9.7 crore in Q1 FY27. Management expects the digital business to break even in Q2 FY27, while the insurance business is expected to break even by the end of Q3 FY27. HealthCo GMV grew 23 per cent year-on-year to around Rs 535 crore.

The proposed integration of promoter-owned Keimed Private Limited and a subsequent HealthCo listing are key value-unlocking developments to watch.

AHLL: Diagnostics-Led Improvement

AHLL revenue increased around 15 per cent year-on-year to Rs 499 crore, driven by 31 per cent growth in diagnostics. AHLL EBITDA margin was 12 per cent.

Management expects diagnostics to grow more than 20 per cent and targets around 20 per cent AHLL margin over the next six to eight quarters, aided by portfolio simplification towards diagnostics and primary care.

Financial Forecasts and Valuation

ICICI Direct forecasts consolidated revenue of Rs 29,756.4 crore in FY27E and Rs 34,361 crore in FY28E. EBITDA margin is expected to improve from 14.9 per cent in FY26 to 15.6 per cent in FY27E and 16.2 per cent in FY28E.

The Rs 10,170 target is based on a sum-of-the-parts valuation using FY28E healthcare EBITDA at 28 times, HealthCo sales at two times, AHLL EBITDA at 12 times and Keimed sales at 1.5 times. This produces a targeted market capitalisation of Rs 1,46,520 crore.

Key Risks

• Cost overruns at new or greenfield hospitals.
• Execution complexity in Apollo HealthCo’s growth and profitability.