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Apollo Hospitals Enterprises Ltd has caught investor attention following its board’s approval to demerge and separately list its omni-channel pharmacy and digital health businesses. The new entity, which will merge Apollo HealthCo, Keimed Private Ltd, and Apollo HealthTech, is expected to become India’s largest integrated pharmacy distribution and digital health platform. 

As part of the proposed restructuring, shareholders will receive 195.2 shares in the new company for every 100 shares held in Apollo Hospitals. The listing is anticipated within 18 to 21 months.

The move has triggered a flurry of analyst reactions, with global brokerages offering mixed views. Morgan Stanley has maintained an Overweight rating with a target price of Rs 8,058, stating that the demerger could unlock significant value and potentially lead to a re-rating of Apollo’s core hospital business. 

According to the firm, Apollo has been trading at a discount to its peers largely due to the underperformance and heavy investment in its 24/7 digital health platform. Separating the two businesses, it argues, will allow investors to better assess the profitability of the hospital division.

Citi has also remained positive, reiterating a Buy rating and raising its target to Rs 8,260. The brokerage noted that Apollo’s hospital segment trades at a 25–30 per cent discount to peers like Narayana Health and Max Healthcare, mainly due to the drag from losses in the digital business and a complex group structure. With a leaner and more focused post-demerger structure, Citi believes this valuation gap could narrow significantly, providing room for upside.

In contrast, Macquarie remains cautious, maintaining an Underperform rating with a much lower target price of Rs 5,700. While acknowledging the long-term benefits of the restructuring, the firm expressed concerns over execution risks and the relatively long wait until the new company’s listing. 

Macquarie also highlighted ongoing losses in the digital vertical and potential integration challenges between the three merging units.

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