Buy Aster DM Healthcare target of Rs 155: ICICI Securities

ICICI Securities research report on Aster DM Healthcare

Aster DM Healthcare’s (Aster) Q4FY20 performance, with lower occupancy, was largely below our estimates primarily as it was impacted by COVID-19 led disruptions in last two weeks of Mar’20. Overall occupancy was down by 5% YoY to 57% in Q4FY20. Consolidated revenue grew 4.6% YoY to Rs23.0bn led by 13.6% growth in India business and 6.4% growth in GCC Hospitals. Adjusted EBITDA margin (ex-IND AS) dropped 220bps to 13.7% (I-Sec: 15.9%). The margin decline was weak operational performance in India business and GCC Clinics. The occupancy level has started improving from lows of Apr’20 and management expects normalcy Q3FY20 onwards.

Outlook

We believe the company’s approach of assetlight expansion and an improving margin trajectory (100bps over FY20-FY22E exIND AS impact) would aid positive FCF generation. Maintain BUY.

Aster DM Healthcare 25062020-ics

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