In Short:
Shares of Apollo Hospitals Enterprise in India dropped 8.4% after selling a stake in its digital unit undervalued by brokerages, losing 4.5% in one day. Advent International invested $297 million in Apollo HealthCo, merging online pharmacy with Keimed. The investment’s valuation was lower than expected at $1.7 billion. Analysts kept “buy” ratings on Apollo’s stock, expecting expansion with the fundraise and merger.
Apollo Hospitals Stock Falls as Hospital Chain Sells Stake in Digital Unit
Oh no! The stock of Apollo Hospitals Enterprise took a hit on Monday, dropping by as much as 8.4%. Why, you ask? Well, it turns out the hospital chain sold a stake in its digital unit, which some folks think was undervalued. Yikes!
Investment by PE firm Advent International
Guess what? PE firm Advent International decided to invest a whopping $297 million in Apollo HealthCo, the digital unit of Apollo Hospitals. That’s a pretty big chunk of change! As part of the deal, Apollo will also be merging its online pharmacy business with pharmacy distributor Keimed. So, lots of stuff happening behind the scenes.
Analysts Disappointed with Valuation
But, here’s the twist – the valuation of Apollo HealthCo from this investment is not as high as some expected. Brokerages like Nuvama Institutional Equities, Jefferies, CLSA, and Prabhudas Lilladher were a bit surprised by the $1.7 billion valuation, as they were anticipating a higher number. Management even admitted that Apollo’s pharmacy business, 24/7, didn’t get the valuation they were hoping for. Bummer!
Positive Outlook Despite Setback
Despite the valuation setback, analysts believe that the fundraise and merger with Keimed are positive moves. This will allow Apollo HealthCo to grow as an integrated pharmacy player without worrying about burning through cash. Phew, at least there’s a silver lining!
Ratings and Price Targets
Even though the stock took a hit, Nuvama, Jefferies, and Prabhudas Lilladher are sticking with their “buy” rating on Apollo Hospitals’ stock. CLSA is also keeping its “outperform” rating. According to data from LSEG, the average price target for the stock is 6,953.5 rupees, which is 14% higher than its current price of 5,979 rupees. So, there’s still hope!
It’s a rollercoaster ride for Apollo Hospitals, but with the right moves, they might just come out on top. Fingers crossed!
