Buy Aster DM Healthcare; target of Rs 400: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aster DM Healthcare

ASTER DM Healthcare (ASTERDM) Q4 consolidated EBITDA grew strong by 29% YoY to Rs1.6bn. GCC stake sale concluded in Mar’24 and the company distributed 80% of proceeds as a one-time dividend. ASTERDM India’s EBITDA increased sharply over the last 3 years (29% CAGR over FY22-24). We estimate 30% EBITDA CAGR over FY24-26E aided by scale-up in margins, healthy ARPOB and bed additions. Our FY25E/26E estimates for India business EBITDA remain unchanged. At current market price, the stock is trading at 20x EV/EBITDA on FY26E, respectively adjusted for minority stake and rental.

Outlook

We maintain ‘Buy’ rating with TP of Rs400, valuing the India hospital segment at 23x EV/EBITDA on FY26E EBITDA. Utilization of proceeds and timely expansion will be key monitorables in the near term.

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