Losses the company’s new ventures, housed under Apollo Health and Lifestyle Ltd, reduced significantly. And, higher revenues at its pharmacy and hospitals improved operating earnings by 27%. Consolidated profit margins rose to 11.4% year-on-year, taking it to the highest levels in recent quarters.

However, the quarter saw a moderation in inpatient growth compared to the year-ago period. “Inpatient volume growth moderated in the quarter to 5.9% for the healthcare business and pricing/mix was the key driver of the 15% (revenue) growth," said Jefferies India Pvt. Ltd in a note.

Even so, the profitability gap between new and established hospitals remains enormous and has scope for improvement. Additionally, per-store metrics of relatively new pharmacy stores have room to improve.

“Two of Apollo Hospitals Enterprise’s businesses are yet to fuel return on capital employed (RoCE), as new hospitals with about ₹2,100 crore in capital employed are running at 63% occupancy; Apollo Health and Lifestyle, with about ₹600 crore in capital employed, is clocking about 35% utilization," said analysts at Edelweiss Securities Ltd in a note.

Comparatively, its peer Narayana Hrudayalaya Ltd, which trades at a lower valuation, has better margins at the consolidated level. Narayana Hrudayalaya turned its focus on asset-optimization and improving profit metrics.

Another peer, Fortis Healthcare Ltd, is beginning to see the benefits of management change. It aims to improve profitability through better utilization and cost optimization.

All three companies are not strictly comparable though, given their presence in a range of services from pharmacy to diagnostics to hospitals. But for the financial performance-focused investor, the peers seem to be offering a compelling recovery narrative.

“While we expect an improvement in margins, going forward, we believe that competitive risks are still high and that valuations leave no room for upside," said Jefferies India in a note to clients.