Apollo Hospitals share climbs 7% on replacing IOC in Nifty50

Shares of Apollo Hospitals jumped 7% to Rs 4,681 in
Friday’s intra-day trade on the National Stock Exchange after the exchange
announced the inclusion of the company in its benchmark Nifty50 index effective
from March 31.

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Apollo Hospital Enterprises (AHEL) stock will take the
place of government-owned oil marketing company Indian Oil Corporation Limited
(IOCL) in the index. It will be the first healthcare services company to be
included in the benchmark index. IOCL shares were 1.82% higher at Rs 112.00, after
surging around 8% to Rs 118.50 on the NSE in the intra-day trade.

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Apollo Hospital’s shares have dropped 21% from their
52-week high level of Rs 5,935 touched on November 26, 2021. They had hit a
52-week low of Rs 2,787.50 on March 25, 2021.

Despite today’s surge, the stock has underperformed the
market during the last 3 months by falling 18%, as compared to a 4.9% decline
in the Nifty50. In the last year, the stock has surged over 50% as compared to
a 10% rise in the benchmark index.

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Apollo Hospitals (APOLLOHOSP) shares were trading 5.29%
higher at Rs 4,613.85. Inclusion of the stock in Nifty50 is expected to attract
inflows of $143 million from exchange-traded funds (ETFs) that mirror the
index, according to brokerage firm Edelweiss Securities.

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Motilal Oswal Financial Services remains positive of the
AEHL as it is one of the leading beneficiaries in the Pharmacy segment due to
its established back-end as well as front-end distribution. It expects 17%
EBITDA CAGR over the next two financial years, led by 21% sales CAGR in
Pharmacy, 14% in AHLL and 13% in the Hospital segment.

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According to Motilal Oswal, the product launch on
Amazon.com will help scale up its customer base as well as provide the last
mile-connectivity to the customer, improving average revenue per occupied bed
(ARPOB)/occupancy in the Hospital segment along with enhancing prospects in the
Apollo Health & Lifestyle Limited (AHLL) segment.