InvestorQ : What explains the sharp growth in the profits of Apollo Hospitals in the Dec-20 quarter?
vidhya Laxmi made post

What explains the sharp growth in the profits of Apollo Hospitals in the Dec-20 quarter?

sarah Leo answered.
1 year ago

Apollo Hospitals reported Q3 PAT growth of 41.5% at Rs.131 crore on the strength of effective cost controls implemented in the quarter. However, the top line revenues reported a small fall by -5.22% on a consolidated basis at Rs.2,760 crore. In terms of specific verticals of the company, there was a fall in revenues in the two most critical segments of healthcare services and pharmacy distribution due to the primary focus only on COVID patients.

Operating profits for the quarter tapered marginally to Rs.265 crore. Apollo Hospitals was successful in keeping the material procurement costs and the employee costs substantially lower in the quarter on a yoy basis. However, the lower revenues did pinch operations. In spite of these challenges, OPM improved marginally from 9.37% to 9.61% in Dec-20 quarter.

Surprisingly, despite these operating challenges, the consolidated Profit after tax for the Dec-20 quarter was up a strong 41.56% at Rs.131 crore. This was attributable to two critical factors in the quarter. Firstly, the interest cost of Apollo came down due to lower yields in the market. At the same time, Apollo managed to earn more through its share in associates and joint ventures, where it had a significant business interest.

Since the net profit improvement happened on a slightly smaller revenue base, the overall impact on PAT margins was quite favorable as it expanded from 3.16% in the Dec-19 quarter to 4.73% in the Dec-20 quarter. It may have been non-operating factors, but surely the bottom line had got a boost