Q3FY21 revenues remained flat for Aster DM Healthcare

Q3 revenues stayed flat QoQ at Rs. 2259 crore (still down 2.7% YoY) vs. Rs. 2268 crore in the last quarter. India revenues grew 10.8% QoQ (up 6.7% YoY) to Rs. 460 crore. However, GCC revenues de-grew 3.4% QoQ (down 4.6% YoY) to Rs. 1866 crore. EBITDA margins expanded 257 bps QoQ to 14.5% due to lower other expenditure. Subsequent EBITDA grew 21.0% QoQ to Rs. 328 crore. PAT came in at Rs. 92 crore, which is ~2.8x of last quarter.

Despite the pandemic having created unforeseen hurdles, Aster continues to sequentially improve on the profitability front. While GCC operations are once again seeing a second Covid wave impact in UAE, India revenues are already back on the growth track amid waning Covid impact. Aster owns a unique business model among Indian healthcare services providers with strong established presence in GCC and India. While the India expansion remains on investment curve, firm footing and FCF generation from the GCC set-up is keeping the entire scheme of things under control, especially when the company is pursuing aggressive expansion mode in both GCC and India albeit via assets light model. Despite the capex cycle getting pushed further due to the pandemic, we are positive on Aster’s integrated business model and expect gradual margins and RoCE improvement on the back of higher occupancy and capacity optimisation in new assets from FY22E onwards. At current levels, we envisage favourable risk-reward matrix and maintain BUY rating with a target price of Rs. 210 on SOTP basis (vs. earlier Rs. 170).

Shares of Aster DM Healthcare Ltd was last trading in BSE at Rs.148.55 as compared to the previous close of Rs. 148.45. The total number of shares traded during the day was 5794 in over 140 trades.

The stock hit an intraday high of Rs. 151.35 and intraday low of 148.2. The net turnover during the day was Rs. 865279.

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