Apollo Hospitals adopts acquisition mode for regional penetration

Healthcare service provider and pharmacy operator, Apollo Hospitals has acquired 50 per cent stake in Medics International Lifesciences for consideration of Rs. 91 crore through primary issuance of shares by the latter. Medics operates a hospital in Lucknow which is a 330-bed super speciality hospital project. Originally, a south-based Apollo Hospitals would be able to strongly penetrate into Uttar Pradesh with this acquisition. The said project is spread over 3.5 lakh square feet area and is likely to be operational by Q3FY19E. Going forward, Apollo Hospitals aims to undertake more inorganic acquisitions.

 The stock of Apollo Hospitals shed 3.1 per cent in Thursday’s trade ahead of the news and continued to tumble even on Friday losing 1.3 per cent at 12:53 hours. The stock is seen trading in a small Upward sloping Channel pattern, starting its downward rally from near to 1,018 to 915, which is its 52-week low level. After that, the stock started trading with higher tops and higher bottoms. However, the stock resisted at 1,090 level i.e. near its 200-day EMA level of 1,093 and retreated without hitting the Channel Line level of 1,130.

 Currently, the stock is trading at 50-day EMA support and Main Trendline support level. Volumes are justifiable and 14-period RSI has given a negative crossover. Let's see if it witnesses some more downside or it's just a pullback of a Downward sloping trendline breakout at 1,005 levels.