Up 280% in 5 years! Why Motilal Oswal sees over 30% upside in this multibagger stock

Shares of Apollo Hospitals Enterprise Limited have delivered over 280 per cent return to its shareholders in the last five years.

The multibagger stock is currently down over 15 per cent from its 52-week high of Rs 5,015.45, hit on March 14, 2022.

However, Motilal Oswal believes that Apollo Hospitals has delivered a phenomenal performance (3.6x earnings) over the past five years, reporting a 24% EBITDA CAGR and reducing net debt by half, benefiting from a lower tax rate.

The brokerage house has a 'Buy' rating on the stock with a target price of Rs 5,600, suggesting an upside potential of over 30 per cent. 

"The pharmacy outlook is encouraging, too, with the aggressive expansion of offline/online infrastructure and the ability of Apollo Hospitals to provide the entire spectrum of healthcare services to its customers," said Motilal Oswal.

It expects Apollo Hospitals to sustain the earnings growth momentum, given the strong execution at the existing sites and planned investments across segments to cater to a higher number of patients and gain wallet share from patients. 

However, it said that the hospital industry is highly prone to government regulations. The regulations with respect to pricing caps on services/patient charges might impact the business profitability adversely.

In terms of technicals, the relative strength index (RSI) of Apollo Hospitals stands at 32.2. A level below 30 is defined as oversold while a value above 70 is considered overbought.