Buy Apollo Hospitals Enterprise; target of Rs 7050: Prabhudas Lilladher

Prabhudas Lilladher's research report on Apollo Hospitals Enterprise

Apollo hospitals enterprise’s (APHS) 100% subsidiary “Apollo HealthCo” (AHL) has entered into agreement to raise equity capital of Rs. 24.75bn ($300mn) from Advent International (Advent) for 16.8% stake. In addition, AHL has also proposed integration of promoter group entity Keimed Pvt Ltd (Keimed) into AHL in phased manner. This will create leading integrated pharmacy distribution business complemented by fast growing omnichannel digital health business. While stake sale of AHL to Advent was done below our estimates by $0.8- 0.9bn; likely merger of Keimed with AHL is a positive step and removes overhang of any leakage.

Outlook

Further mgmt. guidance of Rs17.5-20bn EBITDA of merged entity by FY27 provides comfort. Maintain Buy rating with TP of Rs7,050/share.

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