Apollo Hospitals shares rise 2% after NSE clears demerger of multiple health businesses

Shares of Apollo Hospitals Enterprise Limited (AHEL) rose 1.85% to trade at Rs 7,202.50, after the company received an observation letter with 'no objections' from the National Stock Exchange (NSE) with respect to restructuring its businesses. 

The company had received approval from the Competition Commission of India (CCI) in September for the transactions contemplated under the scheme.

"This is with reference to our letter dated June 30, 2025, informing about the decision of the board of directors of the Company approving the Scheme involving, inter alia, the demerger of the Identified Business Undertaking (as defined in the Scheme) of the Company into Resultant Company, the amalgamation of Transferor Company 1 with and into Resultant Company, the amalgamation of Transferor Company 2 with and into Resultant Company, and the consequent listing of equity shares of Resultant Company on NSE and BSE and admission to trading, subject to receipt of applicable approvals from regulatory and statutory authorities," the statement read. 

What does the demerger propose?

The healthcare chain decided to demerge its omnichannel pharma and digital health businesses (including the 24/7 telehealth business) into a new entity in July of this year. AHEL has proposed a strategic reorganisation, enabling direct listing of its pharmacy and digital health business on the domestic bourses within 18 to 21 months, it said in an exchange filing.

The omni-channel pharmacy and digital health operations, including its telehealth vertical and investment in Apollo HealthCo Ltd (AHL), will be demerged into a new entity - NewCo. Under the scheme of arrangement, AHEL shareholders will receive 195.2 shares of the new entity for every 100 shares they owned.

In an exchange filing, Apollo Hospitals said that the company proposes to unlock value through strategic re-organisation. AHEL shareholders to have direct shareholding in a combined entity, enabling full value discovery and eliminating any discount in valuation, it said.

“The omnichannel pharmacy business and integrated digital healthcare ecosystem will be a unique model to enable access to high-quality healthcare for millions of Indians. What Apollo Hospitals achieved for the creation of the private healthcare industry in India, this new entity will create for the digitally forward generation of tomorrow,” said Prathap C Reddy, Chairman, Apollo Hospitals Group.

The proposed transaction will result in the creation of the largest, integrated omni-channel healthcare ecosystem with ₹16,300 crore ($1.9 billion) of revenue in FY25. The entity plans to achieve ₹25,000 crores revenue by FY27, with a 7% EBITDA margin.

The business will comprise: Apollo 24/7, the digital health platform; the offline pharma distribution of AHL; third-party pharma distribution of Keimed; and telehealth services of AHEL. The combination of businesses is anticipated to generate substantial synergies, and the New Co is expected to achieve a revenue run rate of ₹25,000 crores($2.9 bn) by FY27.

Upon the effectiveness of the Scheme, NewCo will become an Indian Owned and Controlled Company (IOCC) and will apply for listing on the stock exchanges. The listing is expected within 18 to 21 months.

After becoming an IOCC, the NewCo also proposes to consolidate the front-end pharmacy business by acquiring the remaining 74.5% stake in Apollo Medicals Pvt. Ltd. (AMPL), which owns 100% of APL. This will enable the NewCo to participate fully in the business economics of retail pharmacies.

“AHEL will continue its focus on outstanding healthcare delivery, while the New Entity will accelerate its efforts on deepening customer engagement and penetration, with clear capital allocation outlays, growth plans and management teams driving both. Together, we will generate unparalleled value for the consumer, while making sure that all synergies and network effects stay intact, rooted in the Apollo ethos of quality and trust,” said Suneeta Reddy, Managing Director, Apollo Hospitals Enterprise.

AHEL will retain 15% stake in the NewCo to ensure an integrated, seamless, and comprehensive healthcare offering across the patient lifecycle. It will have one nominee director on the Board of the NewCo