The inflow from Apollo Munich stake sale (INR 3bn) and SAP restructuring (INR 3.5bn) will allow APHS (NSE: APOLLOHOSP) to reduce standalone gross debt to INR 29bn by Mar’20. Strong operating performance should allow APHS to generate cash flow from next year that can be used to pay down debt further, spend on organic expansion on its own or bolt-on acquisitions in certain markets.

Proceeds from the Apollo Munich stake sale will be used to repay promoter debt, the pledge will come down to 28-30% in the next month vs. 66% in Sep-19. Promoters have no plan to raise current levels of debt.

The new hospital investments ($380mn spent) are ramping-up with potential to double revenue in the next 4-years and EBITDA margins of 15-18% (vs. 8% currently). APHS maintained its growth outlook for Stand-Alone Pharmacies (SAPs) at 20+%. The SAP restructuring will be completed soon to create a regulatory-compliant structure by keeping the bulk of the economic interest in APHS.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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