Apollo Hospitals’ stock dropped by 4.29% to Rs 5,990 at 1:15 pm and ranked as the second biggest percentage decliner on the Nifty50 index.
Apollo Hospitals Enterprise saw its shares take a significant hit on Monday, dropping over 8% during trading hours. This drop followed the sale of a stake in its digital unit, which was considered undervalued by experts. Initially, the stock fell by 8.4%, but it has since shown a slight recovery. As of 1:15 pm, Apollo Hospitals shares were down by 4.29% at Rs 5,990, making it one of the major losers on the Nifty50 index.
On Friday, Apollo Hospitals made an announcement that Advent International is investing around $297 million in its digital unit, Apollo HealthCo. They also revealed a plan to merge their online pharmacy business with Keimed, a pharmacy distributor, with Advent holding a 12.1% stake in the newly combined entity.
However, brokerage firms like Nuvama Institutional Equities, Jefferies, CLSA, and Prabhudas Lilladher were not entirely thrilled with the valuation of Apollo HealthCo resulting from this investment. Nuvama analysts, in particular, expressed disappointment that HealthCo’s valuation of $1.7 billion was lower than the expected $2.7 billion. They also mentioned management’s acknowledgment that Apollo’s pharmacy business, 24/7, did not receive the valuation they had anticipated.
Apollo HealthCo, which includes both physical stores and an online pharmacy in addition to a telemedicine service, has been impacting the hospital operator’s finances because running Apollo 24/7 requires a lot of cash.
Despite facing challenges, analysts see the recent fundraise and merger with Keimed as a positive move for Apollo HealthCo. This will enable them to grow as an integrated pharmacy provider without the pressure of cash burn.
Encouraged by these developments, Nuvama, Jefferies, and Prabhudas Lilladher have maintained their “Buy” recommendation on Apollo Hospitals’ stock, while CLSA has kept its “Outperform” rating.
As per data from the London Stock Exchange Group (LSEG), the overall rating for the stock remains “buy,” with an average price target of Rs 6,953.5.