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Apollo Hospitals up 10% in two days on strong Q1 results; nears record high

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Apollo Hospitals has been investing big in infrastructure and bringing in advanced technologies such as Proton Therapy for cancer treatment, which has resulted in a higher debt


Shares of Apollo Hospitals Enterprises rallied 7 per cent intra-day to Rs 1,454 apiece on the BSE on Friday, also its 52-week high, on strong June quarter results for FY20 (Q1FY20). The stock has surged 10 per cent at the bourses since Tuesday, when it reported more than double consolidated net profit at Rs 49 crore. The company had a profit of Rs 23 crore in the year-ago quarter. The stock is 6 per cent away from its all-time high level of Rs 1,544 touched on March 2, 2016.


Operational revenue during the quarter grew 16 per cent at Rs 2,572 crore against Rs 2,210 crore in the corresponding quarter of previous fiscal.



On standalone basis, the company’s net profit jumped 32 per cent year on year (YoY) to Rs 79 crore, while net sales grew 17 per cent to Rs 2,229 crore over the previous year quarter. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin improved 270bps to 14.6 per cent from 11.9 per cent.


The company has guided for debt reduction by Rs 700 crore in FY20, aided by cash generation from restructuring the pharmacy business and liquidation of an asset. The management has also guided to reduce the promoter pledge by 40-50 per cent over next six months, from the current 71 per cent, via the proceeds received from Munich stale sale monetisation.


“Apollo has pursued an aggressive expansion plan, which has resulted in subdued earnings over FY15-18. Further, regulatory headwinds have delayed earnings recovery. Post strong growth in FY19, we expect momentum to continue, with an 20 per cent EBITDA CAGR over FY19-21E, led by better case mix, reducing losses from Apollo Health & Lifestyle (AHLL) and increasing profit from new hospitals,” analysts at Elara Capital said in a quarterly update. The brokerage firm has ‘buy’ rating on the stock with the target price of Rs 1,625 per share.


“We are positive on the company’s long-term growth opportunity and strong revenue visibility following the completion of capex. While the stock has underperformed over the past few years due to earnings disappointment, we believe the stabilization in existing hospital margins, ramp-up in new hospitals and lower Apollo Health & Lifestyle Limited (AHLL) losses are signs of an earnings inflection,” said analysts at JP Morgan.


The brokerage firm believes the regulatory risk in the sector is priced into the stock at current levels and that an improving earnings trajectory should drive outperformance over the next year. It has a March 2020 target price of Rs 1,580 per share.


At 12:30 pm, Apollo Hospitals was trading 6.6 per cent higher at Rs 1,448, as compared to a 0.14 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped three-fold with a combined 2 million shares changing hands on the NSE and BSE.

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Sitharaman’s sops for NBFCs may perk up lending, ease liquidity stress

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Illustration by Binay Sinha


To further ease the liquidity stress in the non-banking sector and nudge them to revive their lending activities, Finance Minister (FM) Nirmala Sitharaman on Friday announced a slew of measures for non-banking financial companies (NBFCs) and housing finance companies (HFCs). The government hopes this will result in more credit support for purchase of houses, vehicles, and consumption goods.


The government has provided additional support of Rs 20,000 crore to the stressed housing finance companies from National Housing Bank (NHB). With this, the additional liquidity support for the HFCs from NHB has gone up to Rs 30,000 crore.



In the Union Budget last month, the FM had encouraged public sector banks (PSBs) to buy high-quality pooled assets of NBFCs up to Rs 1 trillion for which the government would provide a one-time six-month partial credit guarantee for the first loss of up to 10 per cent.


The Reserve Bank of India (RBI) had also chipped in by tweaking banks’ bond-holding norms. This will allow banks to borrow an additional Rs 1.34 trillion exclusively for buying such pooled assets and giving loans to NBFCs. The FM on Friday said this partial credit guarantee scheme will be monitored at the highest level in each bank. Through this, it is expected that many of the assets will get quickly pooled and NBFCs will receive the necessary liquidity. “NHB has already settled some of the issues. NBFCs are receiving money from the banks and are moving towards funding,” said Sitharaman.


Sanjaya Gupta, managing director, PNB Housing Finance, said “This will support growth and ease the liquidity crunch. HFCs will now get an additional Rs 20,000 crore from NHB. The initiatives have potential to kick start the real estate sector.”


The government has also permitted NBFCs to use Aadhaar-authenticated bank KYC to avoid repeating the same process when a customer approaches it for credit. This has been a long-standing demand. The necessary changes in the Aadhaar regulations and Prevention of Money Laundering Act rules will be made, the FM said.


“This will streamline the process and also reduce frauds,” said Raman Aggarwal, chairman, Finance Industry Development Council.


The government has also asked PSBs and NBFCs to fast-track their collaboration to provide credit to micro, small and medium enterprises, small traders, self-help groups, and micro finance industry client borrowers.

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PACL Case: Sebi panel invites expression of interest for 28,974 properties

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Sebi


A committee headed by Justice R M Lodha has invited expression of interest (EoI) from prospective buyers for a total of 28,974 properties belonging to PACL Group.


Market regulator Sebi had set up a committee headed by former Chief Justice of India R M Lodha following a Supreme Court order to refund money to investors in the matter of PACL Group.



As per the notice issued by Sebi, the committee has divided the total 28,974 properties belonging to PACL group in four zones — east, west, north and south — with maximum properties being located in the southern zone.


Regarding PACL properties, the apex court’s order dated July 30 observed “we also leave it open to the committee to receive any further offers and to explore them after duly publishing a further notice on the website,” the notice said.


In pursuance of apex court’s order, the committee “invites Expression of Interest from prospective buyers clearly indicating therein, list of properties in each zone, its circle rate, the offer amount and other relevant details,” the Friday notice said.


“The proposal should be for properties in each zone aggregating in value not less than Rs 1,000 crore,” the notice added.


The notice further said that the last date of receipt of proposals is September 9.


PACL, also known as Pearl Group, had raised Rs 60,000 crore from public in the name of agriculture and real estate businesses and was found by Sebi to have collected these funds through illegal collective investment schemes over 18 years.

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Improved market access for domestic retail investors with Aadhaar-based kYC

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Markets, Investors, Indices, Stocks


The government will allow Aadhaar-based KYC for domestic retail investors, and necessary amendments to the rules under the Prevention of Money Laundering Act will be issued.


Announcing a slew of measures to boost the economy, the government said the Depository Receipt Scheme 2014 is expected to be operationalised soon by Sebi. “This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR),” she said.



In order to improve market access for the domestic retail investors, Aadhaar-based KYC will be permitted for opening of demat account and making investment in mutual funds. In this regard, necessary notification for amendments in PMLA rules would be issued.

Besides, steps would be taken with regard to offshore rupee market.


“To bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly,” the government said.

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