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Aster DM to invest Rs 850 crore; add 1,500 beds

Aster DM Healthcare, which runs multispecialty hospitals across India, will add 1,500 beds in the next 2 to 3 years as part of its expansion plans, the company’s top official told Moneycontrol in an interview. “Capital allocated for this particular expansion plan is around Rs 800-850 crore,” said Nitish Shetty, CEO, Aster DM Healthcare India.

The expansion will take the company’s bed tally to India to 6,000+ beds, including the upcoming Aster Capital in Thiruvananthapuram with 350+ beds in the first phase by FY26 and Aster MIMS Kasargod with about 200+ beds. Aster will also add capacity to existing hospitals in Medcity, MIMS Kannur by about 100 beds each and Aster Whitefield with 159 beds.

Eyeing new markets
The company is also exploring opportunities in Maharashtra, Tamil Nadu, and Uttar Pradesh, with plans to enter markets where it can secure a position among the top 3. He added that the company is scouting for opportunities similar to its current model.

“To create a model like what we have done in the metros, you need a population of 3 million. Maharashtra has some cities which have a population of 3 million. So that’s a good place to put up a hospital of our size and our structure,” Shetty said. He sees opportunities in cities like Pune and Nagpur for expansion plans.

Founded in 1987 from a single clinic in Dubai, Aster operates in India and the Gulf region.

It currently has a presence in Kerala, Karnataka, Maharashtra, AP and Telangana. It has 19 hospitals, 13 clinics, 226 pharmacies, 251 patient experiences with a total of 4,000+ operational beds in India currently.

“Our debt-to-EBITDA ratio is very low. We will be able to leverage further and the rest from internal cash accruals,” Shetty said. The India region business had a net debt of Rs 617 crore for the quarter ended September 30 2023. During H1 FY24, the net debt (including lease liabilities)/ EBITDA ratio stood at 3.2.

International operations
Aster had approved the sale of its business in the GCC (Gulf Cooperation Council) region to Alpha GCC Holdings Ltd for a consideration of $1.01 billion. The board will consider the distribution of 70–80 percent of the upfront consideration of $903 million from this transaction as a dividend to its shareholders, which will be in the range of Rs 110 to Rs 120 per share.

In the labs and pharmacies business the company will focus on turning profitable rather than expanding for now. “Lab is going to break even in the final quarter and we expect by next year-end pharmacy also should break even,” Dr Shetty said.

He said that international patients were around 5 percent of the revenues at the group level. He said that in the separation they have drawn up clauses for continuing the flow of international patients from GCC countries. “Post segregation the channel will be kept open and further it is not going to have a major implication in terms of size and numbers,” he added.

The company’s promoter family currently holds a 41.88 percent stake in the Indian listed company and 35 percent in the GCC entity. The stock has surged 30 percent in the last three months and has ‘buy’ calls from all 7 analysts tracking the company. Moneycontrol

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