SYNOPSIS: Apollo Hospitals Enterprise Limited posts 15% EBITDA and 7.8% net margins as ₹2,660-crore pharmacy and ₹474-crore diagnostics dilute profits, despite 25% standalone hospital EBITDA and scale.
Despite its leadership position and nationwide presence, Apollo Hospitals margin performance remains a topic of close scrutiny. The gap between its scale and profitability highlights the unique economics of running large, integrated hospital networks in India, where growth, accessibility, and long-term capacity building often take precedence over short-term margin maximisation.
Apollo Hospitals Enterprise Limited, with a market capitalization of Rs. 1,04,315.77 crore, closed at Rs. 7,255 per equity share, down by 1.49 percent from its previous day’s close price of Rs. 7,364.50 per equity share.
About the Company
Apollo Hospitals Enterprise Limited is a leading healthcare provider in India, offering a wide range of medical services across hospitals, clinics, pharmacies, diagnostics, and digital health platforms. The company delivers primary, secondary, tertiary, and specialty care across key medical areas such as cardiology, oncology, neurosciences, orthopedics, organ transplantation, and emergency care, supported by advanced technologies like robotic surgery and genomics.
Founded in 1979 and headquartered in Chennai, Apollo also operates Apollo 24/7 for teleconsultations, online pharmacy, and diagnostics, serves individual patients, corporates, and government clients, and is engaged in medical education, research, and healthcare-related services.
Financial Outlook
The company delivered steady growth in the September quarter Q2 FY26. Revenue rose to Rs. 6,304 crore in Q2 FY26, compared with Rs. 5,589 crore in Q2 FY25, translating into a 12.8 percent year-on-year growth, and increased from Rs. 5,842 crore in Q1 FY26, reflecting a 7.9 percent quarter-on-quarter growth. The improvement indicates sustained demand momentum and better execution compared to the previous quarter.
Profitability also improved in Q2 FY26, though at a slower pace sequentially. EBITDA increased to Rs. 941 crore, up from Rs. 816 crore in Q2 FY25, marking a 15.3 percent year-on-year growth, and from Rs. 852 crore in Q1 FY26, showing a 10.4 percent quarter-on-quarter increase. Net profit stood at Rs. 494 crore in Q2 FY26, compared with Rs. 396 crore in Q2 FY25, registering a 24.7 percent year-on-year growth, and rose from Rs. 441 crore in Q1 FY26, reflecting a 12.0 percent quarter-on-quarter growth.
Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 14 percent, a profit CAGR of 34 percent and a price CAGR of 24 percent, reflecting both its operational performance and market confidence.
A return on equity (ROE) of about 18.4 percent and a return on capital employed (ROCE) of about 16.6 percent and debt to equity ratio at 0.88, demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 62.5x higher as compared to its industry P/E 51.7x.
EBITDA Margin Comparison
Despite being India’s largest hospital chain, Apollo Hospitals reported a relatively lower EBITDA margin of 15 percent in Q2 FY26, compared to peers such as Max Healthcare at 27 percent, Fortis Healthcare at 24 percent, and Narayana Hrudayalaya at 24 percent. This gap often raises questions, especially since Apollo operates at scale and has a strong brand presence across the country.
Net Profit Margin Comparison
A similar trend is visible at the net profit level. Apollo’s net profit margin stood at 7.8 percent in Q2 FY26, significantly lower than Max Healthcare’s 23 percent, Fortis Healthcare’s 14.11 percent, and Narayana Hrudayalaya’s 15.69 percent. On the surface, this makes Apollo look structurally less profitable than its peers.
Standalone vs Consolidated Performance
The key reason behind Apollo’s lower margins lies in its consolidated structure, not its core hospital business. On a standalone basis, Apollo’s performance is much stronger, with a net profit margin of 17.5 percent and an EBITDA margin of 25 percent, which is broadly in line with industry leaders. This indicates that the hospital operations themselves are not the problem.
Impact of Non-Hospital Businesses on Margins
The margin dilution happens at the consolidated level due to Apollo’s presence in multiple healthcare segments beyond hospitals. The Diagnostics & Retail Health segment, which contributed Rs. 473.9 crore in revenue in Q2 FY26, reported a loss of Rs. 6 crore, dragging overall profitability. Meanwhile, Digital Health & Pharmacy Distribution, Apollo’s second-largest revenue contributor, generated a substantial Rs. 2,660.6 crore in revenue, but delivered only Rs. 73.1 crore in net profit, reflecting thin margins inherent in the pharmacy distribution and digital health businesses.
Other Updates
As part of its strategy to unlock value and streamline operations, Apollo Hospitals is demerging its pharmacy and digital health businesses into a separate entity, Apollo Healthtech Ltd (AHTL). The demerger will consolidate Apollo Health Enterprise, Apollo Healthco, Keimed, and a 74.5 percent stake in Apollo Medicals, bringing the omnichannel pharmacy and digital health operations under one platform. Once listed on the stock exchanges, this move will allow shareholders to directly participate in India’s largest digital health and pharmacy business, while the core hospital operations continue separately, supporting clearer focus and potentially improving consolidated margins.
Shareholding Pattern
As of Q3 FY26, the shareholding pattern of the company shows a strong presence of institutional investors. Promoters hold 28.02 percent of the equity, while foreign institutional investors (FIIs) account for 43.54 percent and domestic institutional investors (DIIs) hold 21.51 percent. The government’s direct stake is minimal at 0.23 percent, with the Government of Singapore holding 2.34 percent, and the public shareholding stands at 6.71 percent. This structure highlights significant institutional confidence, with FIIs being the largest shareholder category.
Apollo Hospitals Limited’s lower consolidated margins are not due to weak hospital operations but stem from its diversified business model, where lower-margin or loss-making segments dilute overall profitability. While peers focus largely on hospital-only models with higher margins, Apollo’s integrated healthcare approach prioritizes scale, reach, and long-term ecosystem building, often at the cost of near-term consolidated margins.
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