Barrons had over the weekend a story on medical tourism (subscription required). It had mentioned Apollo Hospitals in that context, besides a host of Singapore and Thai providers. Now this is a theory that has been around for a decade, and indeed the Indian hospital companies might have benefited in the past few years because of this. And they might benefit more if US insurance companies start reimbursing patients for more procedures carried out in India. But this is just the sideshow story.
The real story is the shabby public health infra in India, and the opportunity for private players. If we look at what Fortis is paying for Wockhardt, Apollo would look a no-brainer. But then, we know that Sardarji screwed the Japs with Ranbaxy, and the money is burning a hole in his pocket. So we shouldn't take it as an indication of what a hospital is really worth.
What I like about Apollo is that the stock is not very volatile. Its correlation with the market is non-existent. So it is a relatively good stock to rotate into out of the more risky stuff. One can also think about it as a long-term investment - if one believes in the Indian hospital story. It is a capital intensive biz. And with Apollo, numbers are always an issue, like for a lot of other Indian companies. The saving grace is that the hospitals are there for everyone to see.
Disclosure: Own Apollo