Apollo Hospitals (APOLLOHOSP)

FairStock Score: 57/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong profitability: ROE of 21.94% and ROCE of 16.64%
• Solid financial health: Piotroski F-Score 8/9 and Altman Z-Score 5.40
• Consistent growth: 5-year revenue CAGR 15.59% and recent profit growth 33.57%
• Leading hospital brand and scale in India creating an intangible moat

Concerns

• Extreme valuation: P/E of 61.93 and EV/EBITDA of 173.75
• Negative free cash flow of ₹-1,245 Cr despite reported profits
• No margin of safety: price far above Graham Number of ₹1,268.95
• PEG ratio of 2.79 indicates growth is not enough to justify the price

AI Analysis

When I look at Apollo Hospitals, I see an excellent business but a very poor price. Quality is evident: a 21.94% ROE and 16.64% ROCE show capital is being deployed well, and the Piotroski F-Score of 8/9 tells me the financials are fundamentally sound. The 15.59% five-year revenue CAGR and 33.57% profit growth reflect a strong franchise in India's healthcare sector. The moat comes from brand trust, clinical reputation, and scale across hospitals, pharmacies, and diagnostics. But as Graham would say, the price you pay determines your return. At ₹7,771.45, Apollo trades at 61.93 times earnings and 13.61 times book value. The Graham Number is just ₹1,268.95, meaning my margin of safety is deep negative – over 500% below fair value. Even the PEG ratio of 2.79 suggests growth is already fully priced in. EV/EBITDA at 173.75 is absurdly expensive, and free cash flow is negative at ₹-1,245 Cr, which bothers me – growth is consuming cash faster than the business generates it. Debt-to-equity at 0.88 is manageable but not conservative. The Altman Z-Score of 5.40 gives comfort on solvency, but I cannot call this an investment. It is a wonderful enterprise, but a dangerous entry point. I would wait for a much more reasonable valuation, or a clear improvement in cash generation, before committing capital. Fools rush in where value investors fear to tread.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer