Apollo Hospitals Restructures Pharmacy Business; Nuvama Raises Target, Maintains ‘Buy’ Rating

 

Apollo Hospitals Restructures Pharmacy Business; Nuvama Raises Target, Maintains ‘Buy’ Rating



Apollo Hospitals Enterprise Ltd (AHEL) has announced a major restructuring of its pharmacy business with plans to list its omni-channel pharmacy unit within the next 18 to 21 months. Under this plan, shareholders will receive 195.2 shares of the new entity (NewCo) for every 100 AHEL shares.

Nuvama Institutional Equities welcomed the move, noting it provides a clearer path to value discovery for investors. As a result, Nuvama has maintained its ‘Buy’ rating on Apollo and raised the target price to ₹8,635, up from ₹8,200, based on estimates up to June FY27.

Key Highlights of the Restructuring

  • Defined Value Unlocking: The new structure separates the pharmacy business, allowing Apollo to focus more sharply on hospital operations.

  • Scalable and Integrated Pharmacy Chain: Investors gain exposure to a robust omni-channel network, integrating offline and digital models.

  • Improved Valuation Clarity: The separation makes the hospital business valuation more transparent and attractive.

Strong Growth Projections

The company is aiming for a 20%+ CAGR in revenue, targeting a scale of ₹25,000 crore. Alongside this, management is working to improve margins by 350 basis points to 7%. Apollo also expects to break even in its 24/7 digital pharmacy operations by FY26E.

Progress in the insurance segment is also under close watch and could provide further upside.

Updated Valuation Outlook

A previous deal with Advent had pegged the value of the pharmacy business at $2.7 billion, which was not well-received by the market. However, Nuvama now estimates the pharmacy division’s value at $3.7 billion using a sum-of-the-parts (SOTP) approach.

Market Positioning and Investor Confidence

With this new strategic roadmap, Apollo is well-positioned to tap into the expanding retail health and wellness market. Analysts believe that successful execution could trigger a stock re-rating.

As of Wednesday, Apollo shares traded at ₹7,511.85, reflecting a potential upside of nearly 15% based on Nuvama’s revised target.

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