Aster DM Healthcare Ltd (ADHL) is one of the largest private healthcare service providers which operates in multiple GCC states and is an emerging healthcare player in India. ADHL operates in all of the GCC states (UAE, Oman, Saudi Arabia, Qatar, Kuwait, Bahrain and Jordan), India and the Philippines. The company operates in multiple segments of the healthcare services industry, including hospitals, clinics and retail pharmacies. As of September 30, 2017, the Company had 17,408 employees including 1,417 full time doctors, 5,797 nurses, 1,752 paramedics, and 8,442 other employees (including pharmacists). GCC operations are headquartered in Dubai, UAE, while Indian operations are headquartered in Kochi, Kerala.
Valuation
ADHL has reported a CAGR of 32.5% and 30.6% on revenue and net profit fronts respectively over FY2013-2017. On its upper band of price of Rs 190, the issue is priced at PE ratio of 28.7x of its FY2017 EPS of Rs 6.6. Most of its revenues comes from UAE and hence ADHL fortunes are directly related with oil. With lower oil prices we believe ADHL will face pressure on margins. Hence, we recommend to Avoid the IPO.
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