Apollo Hospitals stock jumps 4% after approval to list pharmacy, digital health business

Apollo Hospitals Enterprises' stock price has gained 10 percent in the last three months.

Shares of Apollo Hospitals Enterprises rallied as much as 4 percent to Rs 7,555 in today's session on July 1 after the company announced that its board approved the separate listing of its omni-channel pharmacy and digital health businesses within 18–21 months, as part of a broader reorganization to unlock value.

The board of Apollo Hospitals and its subsidiary Apollo HealthCo has granted in-principle approval for a composite scheme of arrangement aimed at reshaping its pharmacy and digital health business.

Under the proposed scheme, Apollo will demerge its omni-channel pharmacy and digital health operations — including its telehealth vertical and investment in Apollo HealthCo Ltd (AHL) — into a new entity (NewCo). This will be followed by the merger of AHL into NewCo.

Additionally, Keimed Pvt Ltd, one of India’s largest pharmaceutical wholesalers, will also be integrated into the new entity, creating a large-scale, end-to-end pharmacy distribution and digital healthcare platform. The new entity aims to clock Rs 25,000 crore in revenue by FY27.

Apollo said NewCo will be classified as an Indian Owned and Controlled Company (IOCC) and is expected to be listed on Indian stock exchanges within 18–21 months, subject to regulatory approvals. As part of the plan, NewCo will acquire the remaining 74.5 percent stake in Apollo Medicals Pvt Ltd (AMPL), which owns 100 percent of Apollo Pharmacies Ltd (APL), consolidating control of its front-end pharmacy business.

Post-restructuring, Apollo Hospitals Enterprise Ltd (AHEL) will retain a 15 percent stake in NewCo to ensure integration across the patient journey and healthcare continuum.

Commenting on the development, Apollo Hospitals Group Chairman Dr. Prathap C. Reddy said the new structure will enable high-quality healthcare access to millions of Indians through a unique omni-channel model. Managing Director Suneeta Reddy highlighted that shareholders would benefit through direct ownership in what will become India’s largest pharmacy and digital health platform.

Shobana Kamineni, Executive Chairperson of Apollo HealthCo, said the integration would create a customer-focused healthcare leader, delivering medicines through over 7,000 physical stores and an online platform covering 19,000 pincodes.

Should you buy, sell or hold the stock?

Morgan Stanley has maintained an overweight rating with a target price of Rs 8,058 per share, an upside potential of over 11 percent. The brokerage notes that Apollo currently trades at a discount to key peers due to its 24/7 business. Under the proposed structure, Apollo shareholders will receive 195.2 shares of NewCo for every 100 shares held in Apollo Hospitals. The international brokerage believes that if NewCo meets its aggressive revenue and EBITDA targets, it could unlock significant shareholder value.

Citi has reiterated its buy call on Apollo Hospitals with a target price of Rs 8,260 per share. The firm views the plan to list the combined digital entity as a positive development. Like Morgan Stanley, the brokerage highlights that Apollo’s hospital business currently trades at a 25–30 percent discount compared to peers, primarily due to ongoing losses in the 24/7 segment and a complex corporate structure. With the spin-off and a more streamlined structure, Citi anticipates that the valuation gap will narrow.

At about 9:20 am, shares of the company were trading at Rs 7,492, higher by 3 percent from the last close on the NSE. Apollo Hospitals Enterprises' stock price has gained 10 percent in the last three months.

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