Don’t miss out on these two stocks today; check ratings, targets inside | Markets News

Stock recommendations: 

Apollo Hospitals – Buy  CMP – ₹7267  FV – ₹9150  Resistance – ₹7500/₹7700  Support – ₹7200/₹7000

Apollo Hospitals Enterprise Limited is India’s largest integrated healthcare platform, spanning hospitals, diagnostics and primary care (AHLL), and an omni-channel pharmacy and digital health business under Apollo HealthCo. The core hospitals business remains the key earnings driver, supported by a strong brand, presence across metros and tier-1 cities, and a diversified specialty mix. Beyond hospitals, the offline pharmacy network provides steady cash flows, while AHLL plays a strategic role in last-mile care and acts as a funnel for higher-acuity hospital services. Apollo 24/7 complements this ecosystem by enabling digital consultations, pharmacy, diagnostics and insurance offerings, although profitability here is still a work in progress.

From a business quality perspective, Apollo stands out for its balanced growth strategy. Capacity expansion is meaningful but measured, with new beds being added in a staggered manner across key markets such as Pune and Delhi. This limits execution risk while allowing the company to steadily improve occupancies and case mix at existing hospitals. Importantly, growth is not purely volume-led. Pricing discipline, richer specialty mix and operational levers such as lower length of stay continue to support improvement in per-patient metrics. The hospital segment therefore benefits from both revenue growth and operating leverage over the medium term.

HealthCo adds another layer of stability. The offline pharmacy distribution business continues to see consistent growth, driven by store additions, better private-label mix and tighter cost controls. While Apollo 24/7 remains loss-making, the focus has clearly shifted from aggressive expansion to improving unit economics, monetisation and integration with the broader Apollo ecosystem. AHLL, meanwhile, is seeing good traction in diagnostics and primary care, benefiting from rising preventive healthcare demand and limited organised competition in several sub-segments.

Looking ahead to the Q3 results season, the operating outlook remains steady. New bed commercialisation at Pune and the Delhi cancer hospital should aid hospital revenues, with growth led by improvement in average revenue per patient rather than sharp volume spikes. HealthCo is expected to continue its momentum, driven by offline pharmacy distribution, while digital GMV is likely to remain sequentially stable as the company prioritises profitability over growth. AHLL should sustain its growth trajectory, supported by diagnostics expansion.

Overall, Apollo’s investment case rests on high-quality hospital assets, a capital-efficient expansion plan and improving returns across the healthcare value chain. While valuations reflect these strengths, the company’s ability to compound earnings through disciplined execution, strong cash generation and gradual margin expansion keeps the long-term story intact. We value Apollo Hospitals at a premium to peers given its scale, integrated model and visibility on earnings compounding, and maintain a target price of ₹9,150, implying continued upside driven by steady hospital growth and improving contribution from non-hospital segments.

Billionbrains Garage Ventures (Groww) – Buy  CMP – ₹163  FV – ₹190  Resistance – ₹166/₹175  Support – ₹155/₹150

Groww has emerged as one of India’s largest and fastest-scaling retail investment platforms, benefiting from rising financialization of household savings and rapid adoption of digital investing. The company operates a product-led, technology-first model that allows users to invest across equities, derivatives, mutual funds, commodities and margin products through a single, intuitive app. This simplicity, combined with strong in-house technology, has enabled Groww to scale largely through organic customer acquisition, keeping marketing costs structurally lower than peers.

From a business perspective, Groww has steadily transitioned from being a pure discount broker to a broader financial services platform. While broking (cash and derivatives) remains the largest contributor, newer revenue streams such as margin trading facility (MTF), commodities, wealth management and consumer credit are gaining traction. This diversification is important as it reduces dependence on pure trading volumes and improves the stability of earnings across market cycles.

Financially, Groww has demonstrated strong growth and improving profitability. Revenues are expected to grow at 20 per cent CAGR over FY2026–28E, driven by higher monetization per user and scaling of under-penetrated products such as MTF and wealth. After a flat earnings year in FY2026E, net profit is forecast to grow 35 per cent in FY2027E and 25 per cent in FY2028E. Ebita margins have already expanded sharply, reaching 60 per cent in FY2025, and are expected to improve further to 65 per cent by FY2028E as operating leverage kicks in and cost intensity declines.

Key operating metrics underline the quality of the model. Marketing spend has reduced to 12 per cent of revenues in FY2025 from over 20 per cent earlier, reflecting strong word-of-mouth and referral-led growth. Return on equity is healthy at 25 per cent, supported by a capital-light balance sheet and limited leverage. Importantly, Groww’s unit economics are attractive: customer cohorts show rising assets per user and ARPU over time, while retention rates are materially higher for multi-product users.

Valuation reflects these strengths. At the current price of ₹159, the stock trades at 31x FY2028E earnings, while the DCF-based fair value of ₹190 implies 35x FY2028E earnings. This premium to traditional brokers is justified by superior growth visibility, structurally higher margins and a long runway for monetization through wealth and credit.

Overall, Groww represents a high-quality play on India’s expanding retail investor base, combining strong growth, improving profitability and a scalable technology platform. Key risks remain regulatory changes, market cyclicality and execution in wealth, but the medium-term risk-reward remains attractive.

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(Disclaimer: Shrikant Chouhan is the head of equity research at Kotak Securities. Views expressed are his own.)