Prabhudas Lilladher bullish on Aster DM; recommends buy rating

ASTER DM Healthcare India EBITDA stands increased by 4- 5% for FY25 and FY26 as we factor in higher operating margins. This has been aided by gross margin expansion, occupancy scale up and faster ramp up in its Whitefield new unit. ASTERDM India’s EBITDA increased sharply over last 3 years (30% CAGR over FY20-23) and growth momentum continued in FY24 with ~30% YoY growth. We estimate 29% pre IND AS EBITDA CAGR from India business over FY24-26E aided by scale up in margins, healthy ARPOB and bed additions. At current market price, adjusted for GCC and minority stake, the India business is trading at 17x EV/EBITDA on FY26E respectively which is at 15- 40% discount to listed peers. We believe such steep discount is unwarranted given similar growth profile.

Outlook
We maintain ‘BUY’ rating with revised TP of Rs515 (earlier Rs. 500) valuing India hospital segment at 22x EV/EBITDA on FY26E EBITDA. Timely closure of GCC divestment and utilization of proceeds will be key monitorable in near term.

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