This healthcare stock is making a strategic split; expect PAT growth to reach 150 per cent and expand bed capacity to 6,334 by FY27!
A renowned healthcare provider in India, will extend its bed capacity to 6,334 beds by FY27 as part of its capital plan.
Aster DM Healthcare has announced the separation of its India and GCC divisions in order to maximise shareholder value and enable each business to pursue a market-focused strategy. The Moopen family will keep a 35 per cent share in the GCC business, while a group led by Fajr Capital will acquire a 65 per cent stake.
The GCC business will be evaluated at USD 1.7 billion in enterprise value and USD 1.0 billion in equity value. Existing shareholders will continue with Aster DM Healthcare Ltd, a publicly traded Indian company. Dr. Azad Moopen will retain his position as Founder and Chairman, supervising both the India and GCC operations, while Alisha Moopen will be promoted to Managing Director and Group CEO of the GCC business. Dr. Nitish Shetty will continue to lead Aster's operations in India.
About the split
Following segregation, Aster DM Healthcare Limited, an international healthcare corporation, would break into two firms. The India business would be held by a dedicated listed firm, while the GCC business will be split off to become Aster GCC. Shareholders will get exposure to both the pure-play India and the GCC businesses, allowing them to participate in both areas' growth stories.
Aster DM Healthcare presently has the second-largest hospital network in South India, having grown from 10 hospitals and 7 clinics in FY18 to 19 hospitals, 13 clinics, 226 pharmacies, and 251 labs. The network's bed capacity has expanded as well, from 3,007 in FY18 to 4,855 now. Furthermore, the network's EBITDA margins increased from 10 per cent in FY18 to 19.1 per cent in H1FY24, and its ARPOB increased from Rs 23,700 in FY18 to Rs 39,000 now. Over the last five years, revenue has increased at a compounded annual growth rate (CAGR) of 20 per cent.
The company believes that segregation the entities will have substantial benefits.
| Financial Metrics (FY23) |
Pre-segregation (GCC + India) |
Post-segregation (India) |
| Revenue YoY Growth |
16 per cent |
25 per cent |
| EBITDA Margins |
13 per cent |
15 per cent |
| EBITDA YOY Growth |
6 per cent |
28 per cent |
| PAT YOY Growth |
-19 per cent |
146 per cent |
| ROCE |
8.60 per cent |
14.10 per cent |
AsterDM Healthcare India, a renowned healthcare provider in India, will extend its bed capacity to 6,334 beds by FY27 as part of its capital plan. Internal accruals will be used to fund this.
Aster India produced a great success in its core hospital business in FY23 while aggressively expanding its other new businesses.
| Business |
Per cent of Revenue |
Revenue |
Revenue Growth (YoY) |
Operating Profit |
Operating Profit Margin |
| Hospitals and Clinics |
93 |
2,851 |
20 |
514 |
18 per cent |
| Labs and Pharmacies |
7 |
217 |
72 |
-28 |
-13 per cent |
| India Overall |
100 |
2,983 |
25 |
453 |
15 per cent |
The core Hospital business has improved significantly and consistently across all operational criteria.
| Particulars |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
Current |
| No. of Capacity Beds |
3,007 |
3,460 |
3,693 |
3,757 |
3,905 |
4,855 |
| No. of Hospitals |
10 |
12 |
13 |
14 |
14 |
19 |
| Patient Volumes (in Mn) |
1.8 |
1.8 |
2.2 |
1.5 |
2.2 |
2.9 |
| Occupancy (In per cent) |
65 |
63 |
61 |
56 |
66 |
67 |
| ARPOB (In Rs ‘000) |
23.7 |
26.1 |
27.7 |
30.1 |
33.5 |
39 |
| ALOS (Number of Days) |
3.6 |
3.6 |
3.5 |
3.9 |
3.7 |
3.4 |
Financial performance
The company's revenue climbed 17.77 per cent year over year, yet it posted a loss of Rs 30.79 crore. This is in contrast to the company's profit of Rs 46.21 crore during the same period the previous fiscal year. Revenue increased by 3.15 per cent over the previous quarter. Selling, general, and administrative expenses climbed by 3.58 per cent quarter over quarter and 13.53 per cent year over year. Operating income was down 43.91 per cent quarter over quarter and 26.29 per cent year over year.
About Company
Aster DM Healthcare Limited is one of the largest integrated private healthcare service providers operating in GCC (Gulf Cooperation Council) countries and an emerging player in India. With an inherent emphasis on clinical excellence, it is one of the few entities in the world with a strong presence across primary, secondary, tertiary and quaternary healthcare.
Disclaimer: The article is for informational purposes only and not investment advice.
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