Aster DM Healthcare is one of the largest private healthcare service providers which operate in multiple GCC states based on numbers of hospitals and clinics and an emerging healthcare player in India. The company has a diversified portfolio of healthcare facilities, consisting of 9 hospitals, 90 clinics and 206 retail pharmacies in the GCC states, 10 multi-specialty hospitals and 7 clinics in India, and 1 clinic in the Philippines as of September 30, 2017. The company's total revenues from operations were INR 59.3 billion for FY17, while Adjusted EBITDA was INR 3,642.4 million for FY17.
- Long standing presence across GCC states and India with strong brand equity
- Well diversified portfolio of service offerings to leverage multiple market opportunities
- Plan to Increase presence by way of Greenfield Expansion and inorganic growth
Outlook and Valuation
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Aster DM Healthcare is one of its kind complete healthcare provider, which caters to patients through hospitals, clinics and pharmacy stores, which are vertically and horizontally integrated. Over the past two years the company has incurred a capex of ~INR 8700 million with which the company plans to expand its presence in GCC (with 4 hospitals and 355 beds) and India (with 5 hospitals and 1300 beds). The revenue from this capex is expected to be recognised in next two years. With stable growth in the GCC, the company plans to increase its contribution to revenues from India from ~19% to ~35% in 3-5 years (with expansion in Tier 1 and Tier 2 cities). With definite expansion plans through organic and inorganic growth opportunities and a limited timeframe for EBITDA breakeven (less than 12 months for hospitals, 18-24 months for clinics), the company is well poised for growth through expansion going ahead. The company’s revenues grew at a CAGR 23.7% to INR 59.3 billion in FY17. PAT for FY17 was at INR 2670 million with EBITDA Margins of 6.5%. We expect the company revenues to continue to grow at similar level with EBITDA margins growing back to ~13% by FY20E. Hospitals trade at TTM EV/Sales of 2.5x - 3.0x. The company is trading at a FY17 EV/Sales of 1.9x. We recommend SUBSCRIBE to the issue from a long term perspective.
SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.
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