Deal valuations weigh on Apollo Hospitals Enterprise, stock declines

Despite valuation concerns, brokerages believe the transaction is positive for the new entity

The stock of Apollo Hospitals Enterprise (AHEL), India's largest listed health care services company, fell 4.6 per cent on Monday and slipped another 0.34 per cent to close at Rs 5,946.20 on Tuesday. The share declined due to lower valuation for subsidiary Apollo HealthCo (AHL) and aggressive valuation for Keimed, a promoter-owned drug wholesaler that is merging with AHL.

AHEL, in a two-step process, is selling a partial stake in AHL and merging Keimed with AHL, a digital healthcare and omnichannel pharmacy. While views on Keimed vary, most brokerages have pegged higher valuations for AHL. AHEL is raising equity capital