ASTER DM Healthcare’s (ASTERDM) Q2 consolidated EBITDA grew 13% YoY to Rs2.53bn, above our estimate; aided by better recovery in performance at Kerala cluster. EBITDA has been increasing sharply over the last 3 years (30% CAGR over FY22-25). ASTERDM’s board has recently approved merger with Quality Care (QCIL), making it the third largest healthcare chain by revenue and bed capacity in India. We remain positive on ATSERDM given the rising visibility on post-merger synergies, occupancy improvement, margin expansion and upcoming bed additions. Our FY26-27E EBITDA estimate broadly remains unchanged. We estimate combined entity post Ind As EBITDA to grow at 24%+ CAGR over FY25-28E to Rs31bn+. The combined entity is trading at ~30x and 24x EV/EBITDA on FY27E and FY28E (adjusted for minority stake and rental) respectively.
OutlookWe maintain our ‘BUY’ rating with revised TP of Rs 775/share, valuing 30x EV/EBITDA for the combined entity on Sept FY27E.
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