Apollo Hospitals' Demerger Sparks Bullish Forecasts: Could The Stock Head For Breakout? Check Target Price

Apollo Share Price Today: Apollo Hospitals' strategic demerger of the pharmacy business is likely to bode well for the entities' long-term value creation across both the healthcare services.

Apollo Hospitals on Monday announced the demerger of its pharmacy business to form a new entity, NewCo. The demerger proposal is likely help the company to bring longterm value creation across both the healthcare services, including hospital and clinic business and pharmacy business, according to analysts.

Apollo Hospitals shares were trading 0.08% higher at Rs 7,500 per share on BSE on Wednesday at 1:13 pm. The company scrip had touched an intraday high mark of Rs 7529 per share and an intraday low mark of Rs 7417 apiece.

Apollo Hospitals' board of directors on Tuesday had approved the demerger of its omnichannel pharma and digital health business, Apollo HealthCo, into a new entity-NewCo-through a composite scheme of arrangement.

The demerger would result in the amalgamation of Keimed, a wholesale pharmaceutical distributor that Apollo ahd acquired last year and its amalgamation with NewCo.

Apollo Hospitals Demerger: Here's What Analysts Have To Say

The strategic restructuring of Apollo Hospitals will not only boost Apollo Hospital's long-term value creation, but it will also help it in position itself as the largest omnichannel pharmacy distribution, according Motilal Oswal report.

"The proposal to demerge the pharmacy business-including offline pharmacy, online and telehealth operations, and Kiemed-into NewCo bodes well for longterm value creation across both the healthcare services (hospital/clinics business) and pharmacy businesses," noted Motilal Oswal in its report on Wednesday, July 2.

Apollo Hospital Demerger Plan: How It Will Benefit Investors?

The move would also enable a better comparison of APHS's pure-play hospital financials/valuations with peers, and let investors focus on the hospital segment's growth. THe proposed demerger would ensure that there would be no cash drain from hospitals into online and lower complexity, according to Kotak Institutional Equities.

"This move is an incremental positive because it will enable a better comparison of APHS' pure-play hospital financials/valuations with peers, thereby driving increased investor focus on the hospitals segment, ensuring no cash drain from hospitals into online and lowering complexity," read Kotak Institutional's latest report.

APHS would also be able to focus more on its core healthcareservices and the newly formed entity would be able to lead a more focused growth in digital health and pharmacy segment with direct leadership, mentioned Motilal Oswal in its report.

Apollo Hospital Share Price Target

Both the brokerages remained bullish on Apollo Hospitals' strategic demerger announcement. Motilal Oswal initiated a 'Buy' rating for the stock indicating a 16% upside in its valuation. MOFL had fixed a target price of Rs 8,720 per share for the stock in long term.

Kotak Institutional Equities, in its latest report, had given a 'Buy' rating for the healthcare stock with a fair value price of Rs 8,530 apiece.

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