Apollo Hospitals visions better margins in upcoming years

Apollo Hospitals is planning to improve its margins through volume growth and cost control to 23 per cent by 2018-19. The company’s margins had descended to 20.1 per cent in the June quarter owing to caps on stent pricing and declining business in some of the company’s hospital clusters. Apollo faced an incremental cost of Rs 35 crore else its earnings were stable during the September quarter. A recently launched Navi Mumbai Apollo Hospitals’ contributed a loss of Rs 10 crore.

Suneeta Reddy, managing director of Apollo Hospitals, said "Margins in existing hospitals have declined to 20.1 per cent in the first quarter. We are committed to taking this to 23 per cent in 2018-19 through a combination of volume growth and cost control,"

She said the company was not expecting the Centre to cap services prices. "By pricing services, we are able to absorb any change in input cost, so we will increase margins," on reports that the government may control the cost of stent implants.

The company reveals its plans to expand its corporate base and retail business. "We expect return on invested assets to improve to 13.5 per cent by 2019-20 from 7 per cent at present. It all depends upon their ability to manage their capex," said Siddhant Khandekar, research analyst, ICICI Securities. Analysts suggest Apollo Hospitals must manage the issue of rising debt.