Aster DM Healthcare shares climbed 11% today. What analysts say on GCC stake sale

Aster DM Healthcare climbed over 11 per cent in Friday's trade to hit a record high level following the much-awaited Gulf Co-Operation Council (GCC) stake, which is seen unlocking value for shareholders. Analysts said despite a related-party transaction, the GCC stake sale valuations were reasonable.

Brokerage Prabhudas Lilladher said adjusted for GCC stake, Aster DM Healthcare's India business is trading at 19 times and 15 times EV/Ebitda on FY25E and FY26, respectively. This, the brokerage said, is at 15-30 per cent discount to Aster DM Healthcare’s listed peers.

"We maintain ‘Buy’ rating with revised target of Rs 430 (earlier Rs 345) valuing India hospital segment at 20 times (18 times earlier) EV/Ebitda on September 2025 Ebitda. Timely closure of GCC divestment and utilization of proceeds will be key monitorable in near term," the brokerage said.

The stock rose 11.05 per cent to hit a high of Rs 424 on BSE.

JM Financial said that the 100 per cent sale of GCC business for $1 billion to Alpha GCC Holdings was done at the lower end of valuation, albeit within its expected range of 8-10 times (peer average 15 times).

"Aster will receive $903 million on closing (4Q expected) and balance on certain contingent events. The consideration received will be primarily used for dividend payout and partly for expansion. There is a separate dedicated management team for both businesses; Ms Alisha Moopen has been elevated to MD and Group CEO of GCC business and Dr Azad Moopen will oversee both operations. While the deal is positive and unlocks value, the quantum of dividend payout, promoter exit and capital allocation remain key uncertainties, in our view," it said.

JM Financial said Aster DM Healthcare has performed well in its India hospitals segment and plans to add 1,500 beds (30 per cent) by FY27.

Aster labs, pharmacies and O&M hospitals have dragged India margins but are expected to turn around gradually, it said. JM Financial values at Rs 165 per share and suggested a target price of Rs 410 for Aster DM Healthcare.

Kotak Institutional Equities said while there had been concerns among Aster DM Healthcare investors on whether GCC would get a fair valuation, given this being a related party transaction, the GCC valuation comes as a positive surprise.

"In our view, the India business is now trading at 18 times FY2025E pre-Ind AS 116 EV/Ebitda and any rerating hereon will be contingent on further margin improvement coupled with disciplined expansion. Factoring in steady progress in the existing hospitals along with the addition of new beds, we expect Aster DM to report healthy India sales/EBITDA CAGRs of 19 per cent each over FY2023-26E," the brokerage said.

Kotak has  retained its 'ADD' rating with a raised fair value of Rs 415.

Prabhudas Lilladher said 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," Prabhudas Lilladher said.

Proper capital allocation strategy will be a key to scale-up India operations. Conversely, ASTERDM 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.

 

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