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Summary: Apollo Hospitals is spinning off a digital and pharmacy giant. The new company, Apollo Healthtech, is already being valued like a tech stock. Let’s find out whether its growth plans and numbers match the hype.
Apollo Hospitals is restructuring. After building India’s most recognisable hospital brand over four decades, the group is now spinning off its digital and pharmacy businesses into a separate listed entity: Apollo Healthtech.
The new company will house Apollo 24|7 (its digital health platform), Apollo Pharmacy (the retail pharmacy chain) and Keimed, its wholesale distributor. Together, they will form what Apollo claims is India’s largest omni-channel health platform.
The logic behind the split is straightforward. Hospitals and pharmacies are fundamentally different businesses. One is capital-intensive and stable, with high margins and long payback periods. The other is fast-moving, scale-driven, and thin on profitability, more akin to tech and retail than healthcare. By separating them, Apollo is hoping the market will value each business on its own merit.
The growth blueprint
Management has laid out ambitious goals. Apollo Healthtech is targeting revenue of Rs 25,000 crore by FY27, up from about Rs 16,000 crore now, while also aiming to double EBITDA margins from 3.5 per cent to 7 per cent. That would yield roughly Rs 1,875 crore in EBITDA.
The optimism stems from the pharmacy chain’s aggressive expansion, which is adding 500–600 stores annually. Store count has crossed 6,600, each doubling as a fulfilment hub for online orders. The management also expects the digital business to turn EBITDA-positive by FY26.
So far, so promising. But what about the new entity’s valuations?
Paying top dollar?
Apollo Hospitals has a total market cap of Rs 1.07 lakh crore (as of July 9, 2025). Apply the average industry P/E of 57 times and the hospital business alone is worth about Rs 81,200 crore. That implies the remaining Rs 26,000 crore is the market’s valuation for the to-be-listed Healthtech entity.
Based on Healthtech’s FY25 net profit of Rs 221 crore, this translates to an explosive P/E of 118 times, especially for a business with slim net profit margins of 1.5 per cent and a loss-making digital arm (Apollo 24|7).
Even if the management’s targets are fully met (EBITDA margin expansion translates to net profit), the entity’s profit could grow to Rs 750 crore, cooling the P/E to 35 times—more reasonable but still rich since it’s entirely contingent on delivering those stretched projections.
The risks investors shouldn’t ignore
Healthtech’s expected valuation further looks uncomfortable when considering the risks that could upend the story:
- Integration risk: Merging a family-run wholesaler, a nationwide retail chain, and a tech platform is no small feat. Cultural and operational alignment is not guaranteed.
- Competitive pressure: Players like Tata 1mg, PharmEasy and MedPlus are gunning for the same customer, armed with capital and a hunger for market share. A price war could keep margins under pressure.
- Regulatory uncertainty: India’s e-pharmacy rules remain in flux. Any change in how inventory is handled or drugs are delivered could disrupt current business models.
Your takeaway
Apollo’s breakup is a strategically sound move, especially for the pharmacy and digital businesses, where value unlocking was long overdue. The market will likely assign the new entity a steep premium, in line with peers. Whether that proves fair, or fleeting, hinges entirely on execution. If the management delivers on its ambitious targets, the valuation may hold. If not, the gap between promise and performance could widen quickly.
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