Aster DM Healthcare has undertaken strong cost-rationalisation initiatives and has guided for partial sustainability of reduction in costs, which will support margins.

Chirag Batavia • 26 April 2021

CLOSED

Aster DM Healthcare

  • Turnaround of new units in India and GCC recovery will help drive earnings over FY22-23E even as higher cases in the UAE impact near-term performance.

  • Aster has undertaken strong cost-rationalization initiatives and has guided for partial sustainability of reduction in costs, which will support margins.

  • Foray into diagnostics and pharmacy (in India), home-care (in UAE) and tele-health also creates new avenues for growth over medium to long term.

  • We cut our FY21E EBITDA by 9% to factor in weak 2H performance & tweak FY22-23E estimates by 2%. We expect ASTERDM to post EBITDA CAGR of 13% over FY20-23E.

  • Inexpensive valuations drive our BUY rating. Aster trades at 5.4X FY23E EBITDA, implying the GCC business trading in a deep value zone at 4X FY23E EBITDA. Our revise Fair Value works to Rs220.

  • Fresh promoter pledging (10% of promoter shareholding) could act as an overhang for the stock performance.

Aster DM Healthcare: BUY

Dated: 26 th April 2021

CMP: Rs.148

Fair Value: Rs.220

Potential Upside: 48.6%
Market Cap: Rs.7,383 Cr
Time Frame: 12 months

Note: The above is a brief note on the company, based on the inputs of KIE research report dated 10th February 2021, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental .      Disclaimer: http://bit.ly/2n5AxIE


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