Apollo Hospitals Enterprises Ltd, one of the top healthcare providers in India, is reportedly planning to sell its maternity and infant care business, Apollo Cradle and Childrens Hospital Ltd, in a strategic move to sharpen focus on core operations and fuel future growth. This development was reported by Economic Times citing individuals aware of the matter.

Valuation and Buyer Search

As per the report, Apollo Hospitals has hired Allegro Capital, a financial advisory firm, to help identify potential buyers. The maternity business unit is expected to be valued between ₹1000 crore and ₹1200 crore.

Apollo Cradle and Childrens Hospital Ltd is a fully owned subsidiary of Apollo Specialty Hospitals. It currently operates 13 centres across key Indian cities including Delhi, Bengaluru, Chennai, Hyderabad, Amritsar, Gurugram, Noida, and Ghaziabad, with a total bed capacity of 363.

The decision appears to be part of Apollo’s broader plan to consolidate its operations around more scalable and profitable segments such as tertiary and quaternary care.

Competitive Landscape in Maternity Care

Apollo Cradle competes with other well-known maternity and childcare hospital chains like Rainbow Childrens Medicare, Motherhood Hospitals, Cloudnine, and Kangaroo Care. This sector, while vital, operates on narrower margins compared to general and multi-specialty hospitals.

The sale of Apollo Cradle signals a strategic withdrawal from this space and a deeper emphasis on specialty care and hospital expansion where Apollo enjoys stronger competitive advantage.

Stock Market Reaction and Financial Performance

Following the news, Apollo Hospitals stock rose by 1.14 percent in early trade on Monday to ₹6956.55.

The move comes close on the heels of Apollo reporting its Q4 FY25 earnings on May 30. Highlights from the quarterly results include:

• Net profit of ₹411.5 crore, a 59.3 percent year-on-year increase

• Operating revenue of ₹5592.2 crore, up 13.1 percent year-on-year

• Improved patient volumes and operational efficiencies driving margin growth

These results indicate strong momentum in Apollo’s core business and support the rationale behind monetising non-core units like Apollo Cradle.

Future Expansion and Broker Outlook

Apollo Hospitals has lined up aggressive expansion plans for the coming years. According to Nuvama Institutional Equities, Apollo is targeting:

• Addition of 1500 beds in FY26

• 16 percent CAGR in hospital revenue over FY25 to FY27

• An additional 2400 beds to be added over the next three to four years

While these plans are ambitious, they are expected to impact operating margins temporarily. Nuvama notes a likely 140 basis point margin impact in Q4 FY26, although Apollo’s management intends to mitigate this through cost optimisation and improved case mix.

Nuvama has factored in an 80 basis point margin dip for FY27, reflecting cautious optimism that the expansion will be efficiently executed.

Strategic Implications of the Sale

The decision to exit the maternity and childcare space aligns with Apollo’s strategy to focus on scalable core operations, improve capital efficiency, and strengthen its market leadership in multi-specialty and tertiary care.

Selling Apollo Cradle at an attractive valuation could help the group:

• Reallocate capital towards faster-growing and higher-margin verticals

• Reduce complexity in operations

• Improve return on equity and enhance shareholder value

Apollo’s execution on the bed expansion plan, along with cost control and better clinical mix, will be crucial in maintaining its growth trajectory over the next three years.

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