Target: ₹430
CMP: ₹381.80
Aster DM Healthcare board has approved the much awaited GCC stake sale at reasonable valuations, that will unlock value for shareholders. Proper capital allocation strategy will be a key to scale-up India operations.
Conversely, Aster DM India’s EBITDA increased sharply over last 3 years (30 per cent CAGR over FY20-23). We estimate 23 per cent EBITDA CAGR from India biz over FY23-26E aided by scale up in margins, healthy ARPOB and bed additions. Our FY24E/25E India business EBITDA stand increased by 1-3 per cent.
Going ahead, Dr Azad Moopen will continue in his role as the Founder & Chairman and oversee both India and GCC businesses, while Alisha Moopen will be promoted as Managing Director and Group CEO of GCC business. Dr Nitish Shetty will continue as the CEO of Aster business in India.
At current market price, adjusted for GCC stake the India business is trading at 19x and 15x EV/EBITDA on FY25E and FY26E respectively which is at 15-30 per cent discount to listed peers.
We maintain ‘Buy’ rating with revised TP of ₹430 (earlier ₹345) valuing India hospital segment at 20x (18x earlier) EV/EBITDA on Sept 2025 EBITDA. Timely closure of GCC divestment and utilization of proceeds will be key monitorable in near term.