PL Capital Maintains ‘Buy’ on Apollo Hospitals Amid HealthCo Demerger Plan
- 7th July 2025
- 05:00:00 PM
- 3 min read
Mumbai | July 7 – Apollo Hospitals Enterprise Ltd (AHEL) has unveiled a strategic restructuring plan aimed at unlocking significant shareholder value by demerging its digital health and pharmacy arms into a newly listed entity — Apollo HealthCo (NewCo).
Brokerage PL Capital has maintained its ‘Buy’ rating on the stock with an upwardly revised target price of ₹8,350, highlighting the move as a key long-term trigger.
The demerger — combined with the merger of Keimed Pvt Ltd, a major backend pharmacy distributor — is expected to create India’s most integrated omnichannel pharmacy and digital health platform, with the listing targeted between Q4FY27 and Q1FY28.
“The demerger is value accretive and strategically sound, creating a high-growth digital and pharmacy platform while allowing AHEL to concentrate on core healthcare,” said Param Desai, Analyst at PL Capital.
Transaction Highlights
- What’s Moving to NewCo?
Apollo 24×7, Telehealth, and Pharmacy Distribution businesses to be carved out into NewCo. - Shareholding Impact
Apollo shareholders to receive 195.2 shares of NewCo for every 100 AHEL shares, resulting in ~667 million shares in NewCo (post-demerger). - Ownership Structure
AHEL to retain a 59.6% stake in NewCo post-merger, supported by a collaborative business framework and royalty income from the Apollo brand. - Valuation Outlook
PL Capital pegs HealthCo’s value at ₹400 billion, based on FY27E EBITDA of ₹16 billion and a 26x EV/EBITDA multiple.
Apollo Hospitals Financial Snapshot (Consolidated)
| Metric | FY25E | FY26E | FY27E |
| Sales (₹ Cr) | 21,794 | 24,855 | 29,373 |
| EBITDA (₹ Cr) | 3,022 | 3,833 | 4,898 |
| PAT (₹ Cr) | 1,446 | 1,956 | 2,680 |
| EBITDA Margin (%) | 13.9 | 15.4 | 16.7 |
| EPS (₹) | 100.5 | 136 | 186.4 |
| ROE (%) | 19.1 | 21.6 | 24.1 |
Source: PL Capital Estimates
Why It Matters
The transaction separates Apollo’s capital-intensive hospital operations from its asset-light digital and retail healthcare verticals. PL Capital sees this as an opportunity for independent value discovery, with each business now free to pursue growth under distinct strategic mandates.
“This unlock allows both AHEL and HealthCo to scale efficiently, optimize capital allocation, and attract investors aligned with their respective models,” noted Sanketa Kohale, Co-analyst at PL Capital.
HealthCo Outlook & Strategy
PL Capital highlighted a strong outlook for the newly formed Apollo HealthCo, with revenue projected to reach ₹25,000 crore by FY27 and EBITDA margins expected to expand to 7%, up from 3.5% in FY25. The FY25 Gross Merchandise Value (GMV) stands at ₹18,200 crore, reflecting robust traction across pharmacy and digital channels. A key near-term milestone is the expected breakeven in Apollo 24×7 over the next four quarters. The company is also targeting an increase in private label contribution, aiming for a combined share of 10–12% by FY27 across online and offline channels. Additional margin drivers include monetisation of insurance and advertising revenues, and backend efficiencies from the integration with Keimed, which brings a distribution network of 101 centres and access to over 75,000 pharmacy clients. Notably, NewCo will pay an annual royalty of ₹10 crore to Apollo Hospitals for brand usage, with provisions to scale this amount progressively over time.
Bottomline
“This transformation aligns AHEL with global healthcare capital allocation standards. HealthCo will be a high-growth, consumer-facing digital play, while AHEL retains focus on hospitals and diagnostics,” PL Capital’s report said.
The brokerage expects a 27% EBITDA CAGR for HealthCo between FY25–27, reinforcing confidence in management’s growth projections.
Read the full analysis and PL Capital’s detailed report on Apollo Hospitals here.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
