Our target price for Apollo is Rs8,260, using a SoTP approach. Indian hospitals have a predictable and steady revenue stream, given high unmet demand and low, but growing, penetration of organized healthcare. However, given that these companies are still in an investment phase, we believe EBITDA reflects the operating profitability of the business much better at this point. We therefore use EV/EBITDA vs. EBITDA CAGR as our primary methodology to value Apollo's healthcare business. Our target EV/EBITDA multiple of 27x is near the higher end of the range (16-27x) to reflect strong margin trajectory over the next many years – arriving at a value of Rs6,690/sh (27x Sept'26E EBITDA) for its hospitals business. We value the Pharmacies biz at 2x of Sept’26 sales (in-line with other listed retail players in this space) – arriving at a value of Rs1,370 (2x Sept'26E Sales). We value the 24/7 (online business) at 2x of sales, which is in-line with other online players in this space as the business is currently in the investment phase, and arrive at a value of Rs200/sh (2x Sept'26E Sales).

Key downside risks that could prevent the shares from reaching our target price include: 1) Apollo Hospitals has a fixed-cost-intensive business, with high operating leverage. Inability to scale up occupancy and realizations could depress capital efficiency; 2) Execution is a key risk – delays in setting up hospital projects; 3) Higher cost of real estate and/or an inability to get property at the desired locations could impact operations.