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Apollo Hospitals Vs Fortis Healthcare: The Covid-19 pandemic shed light on the infrastructural capabilities of hospitals, not only in India but also in the rest of the world.

A strong health care sector is not only essential for the wellness of the people but also for strong economic growth.

In this article, we will have a look at two of the biggest players in the healthcare sector Apollo Hospitals Vs Fortis Healthcare. Keep reading to find out!

Industry Overview – Healthcare

The size of the overall Indian Healthcare market was estimated at US$ 265 Billion in 2020. By 2022, the industry is expected to US$ 372 billion at a CAGR of 22%.

The healthcare sector in India broadly includes hospitals, pharmaceutical companies & standalone pharmacies, diagnostic services, medical equipment and supplies, medical insurance, telemedicine companies, medical tourism, and retail healthcare.

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The Indian government has taken a multitude of initiatives to drive the growth of the healthcare sector in the country and has been yielding positive results.

Some of the well-known schemes are Ayushman Bharat, National Health Policy (NHP) Scheme, Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), and Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA) out of many.

Business Overview

Apollo Hospital Enterprise Limited

Apollo Hospitals | Apollo Hospitals Vs Fortis Healthcare

Founded in 1983, Apollo Hospitals began its journey as the country’s maiden corporate hospital.

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AHEL has established Telemedicine units across 10 countries, a Global Projects Consultancy Division, Medical Colleges, Medvarsity for e-Learning, Colleges of Nursing and Hospital Management, and a Research Foundation. 

Apollo’s footprint includes 11,000 beds, 4,500 pharmacies, 1175 national retail healthcare centers, and a deep online presence as of FY22. Apollo is the largest administrator of Covid vaccines in the private sector in India.

Fortis Healthcare Limited

Fortis Healthcare | Apollo Hospitals Vs Fortis Healthcare

Fortis Healthcare Limited (FHL) is an Indian multinational chain of private hospitals. It started its health care operations in Mohali where the first Fortis hospital was established.

Later on, the hospital chain purchased the healthcare branch of Escorts group and increased its strength in various parts of the country.

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The Fortis Hospital Network has 36 Hospitals with 4,000+ Operational beds. Their company SRL Diagnostics has a network of  400+ diagnostic centers and 2,250+ Customer touchpoints. 

Financial Metrics

Let us have a look at the financial metrics of the companies:

Revenue

Apollo hospitals have a larger scale of operations than Fortis. More than 53% of their revenue is earned from Healthcare Services followed by Pharmacy Distribution with 41% and AHLL which contributes around 6%.

Its revenue has grown consistently during the pre-covid period. 

Fortis Healthcare has mainly two divisions from which it earns revenue. The Healthcare services contribute around 76% to their total revenue and the rest 24%  is from their Diagnostic services.

Even before the breakout of covid the company was not able to maintain a consistent revenue growth margin.

Revenue (Rs in Cr)20182019202020212022
Apollo Hospital (Rs in Cr)8,2439,61711,24710,56014,663
(Revenue growth in %)-16.67%16.94%-6.11%38.85%
Fortis Hospital (Rs in Cr)4,5614,4694,6324,0305,718
(Revenue growth in %)--2.01%3.65%-13.00%41.88

Profitability

The gross profit margin reflects how successful a company’s management is in generating revenue, considering the costs involved in producing its products and services.

For FY22 the gross profit margin for Fortis is higher at 19.17% than Apollo hospital at 15.43%. 

Operating income shows how much a company is earning after deducting all the variable costs but before paying interest and taxes.

The operating profit margin for Fortis has increased higher than Apollo with 13.91% compared to 11.33%. 

The net profit margin of both companies has greatly increased from last year. The net profit margin for Fortis stands at 13.39% and for Apollo, it stands at 7.50%.

Fortis was below Apollo with respect to all the margins in FY21, but it has significantly increased these margins than Apollo in FY22.

Profit Margin ratios (Rs in Cr)20182019202020212022
Gross Profit Margin (%)
Apollo Hospital10.0111.3814.3511.1915.43
Fortis Hospital9.057.114.2911.1919.17
Operating Margin (%)
Apollo Hospital5.657.278.845.7611.33
Fortis Hospital3.811.897.993.9813.91
Net Profit Margin (%)
Apollo Hospital0.712.073.871.287.50
Fortis Hospital-21.65-13.161.71-2.5713.39

How Much Are Investors Earning?

ROE shows how efficient management is at utilizing equity financing provided by shareholders. For FY22, the ROE for Apollo hospitals is 18.77% and Fortis has an ROE of 8.98%.

ROCE metric is used to measure how much the company is able to yield from the capital that is being used. Apollo hospitals have a higher ROCE of 15.38% than Fortis which has a ROCE of 7.49%.

Apollo is a dividend-paying company whereas Fortis healthcare does not pay dividends to its shareholders. 

Return ratios (Rs in Cr)20182019202020212022
Return On Equity (ROE)
Apollo Hospital3.617.0813.623.2618.77
Fortis Hospital-24.84-4.520.86-1.798.98
Return On Capital Employed (ROCE)
Apollo Hospital6.619.6711.046.4915.38
Fortis Hospital2.681.014.221.617.49
Earnings Per Share (EPS)
Apollo Hospital8.4416.9732.7010.7473.42
Fortis Hospital-19.46-3.70-0.77-1.457.35
Dividend/Share (Rs)
Apollo Hospital566311.75
Fortis Hospital00000

How Does The Valuation Of The Company Look?

The PE ratio shows the valuation of the company by comparing its earnings per share with the current market price per share. Apollo has a PE of 72.5 while Fortis has a PE of 57.7. The PE of Fortis is closer to the PE of the industry which is closer to 31.8.

The EV/EBITDA valuation metric is used by investors to measure the value of a company, debt included, to the company’s cash earnings less non-cash expenses. Generally, the stock with a lower ratio is considered ideal. The EV/EBITDA of Fortis is lesser than that of Apollo.

Valuation Parameter (Rs in Cr)20182019202020212022
Price to Earnings Ratio (PE)
Apollo Hospital126.1472.3434.83270.2761.51
Fortis Hospital-6.34-36.69163.83-137.3439.51
Price to Book Value (P/B)
Apollo Hospital4.565.104.749.0711.55
Fortis Hospital1.581.551.432.453.55
EV/EBITDA
Apollo Hospital21.5718.4711.6836.9729.51
Fortis Hospital21.4037.0816.7836.2621.26

Share Holding Pattern of the company

If the take a look at the shareholding patterns of Apollo, Promoters hold 29.33%, FII hold 48.48%, DII hold 15.64% and the Public including the government holds 6.55%.

As for the shareholding patterns of Fortis, Promoters hold 31.17%, FII holds 29.66%, DII holds 17.6% and the Public holds 21.57%.

Future Prospects Of The Company

Apollo Hospitals Enterprise Ltd: The company has plans to invest in digitization and innovation. They have launched programs such as Apollo ProHealth which is a proactive and personalized health management system using AI and analytics. 

Fortis Healthcare Ltd: The Company is progressing toward one integrated platform across all hospitals vis-à-vis the present diverse legacy systems.

These are aimed at creating a singular view of a patient irrespective of which Fortis Hospital the patient visits. For SRL, the company is focused on a new vision to make its diagnostics solutions more innovative and high quality. 

In Closing

The sector has been allocated Rs 86,200.65 crore in the Union Budget 2022-23. This is a hike of 16 percent over Rs 73,931 crore in 2021-22.

This will not only provide opportunities to people but also scale up the operations of the business. That’s all for this post on Apollo Hospitals Vs Fortis Healthcare. Happy investing! 

Have you invested in either of the companies? Let us know in the comments.

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