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Apollo Hospitals undertakes strategic restructuring to unlock Pharmacy business

ICICIdirect Research 04 Jul 2025 DISCLAIMER

In a major strategic restructuring, Apollo Hospitals plans to de-merge its Omnichannel pharmacy business Apollo Health Co, and merge the same with the promoter entity Keimed.

While Apollo Health Co is retail pharmacy business, Keimed is wholesale pharmacy business which focusses on backend.

As per our estimates, the embedded value of pharmacy business is ~20% of Apollo’s current market cap. This likely unlocking is expected to enable Apollo Hospitals to focus entirely on its core hospital business while a dedicated listed arm will take care of Pharmacy business.

This merged entity is expected to be listed in 15-18 months and this new scheme of arrangement will enable shareholders of Apollo Hospitals to directly have ownership in the merged entity. (For every 100 shares owned by the AHEL shareholders, they will receive 195.2 shares in the merged entity.)

This proposed unlocking is likely to create the largest listed omni channel pharmacy distribution and digital platform company having both front-end and back-end capabilities that could generate ₹25000 crore revenue by end of FY27 (currently around ₹16000 crore) with an EBITDA margin of ~7% (currently at 3-3.5%).

We remain positive regarding this development as both the Hospitals and Pharmacy businesses have maintained good growth momentum (12-13% consistent growth) and have firm expansion plans.   

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