Broker’s call: Aster DM Health (Outperform)

Target: ₹691

CMP: ₹569.65

Aster DM Healthcare Q4-FY25 revenue missed ours/BBGe by 7 per cent owing to weak performance in Kerala (-4 per cent y-o-y), impacted by fewer international patients and the festive season of Ramazan. Revenue from Karnataka/Maharashtra and AP/Telangana grew by 16/10 per cent.. EBITDA missed BBGe/BNPPEe by 8/6 per cent. Quality Care’s revenue/EBITDA grew 12/14 per cent, with a 20.5 per cent EBITDA margin.

We believe the current performance in Kerala is transitory and the competitive landscape remains favourable. Aster DM is the first choice for patients in Kerala as new/existing players are unable to match its scale and quality. Management guided to mid-teens growth for the Kerala cluster in FY26.

Maintain Outperform with a revised target price of ₹691.

Upside risks: Competition in Kerala with incumbents expanding in the region, by setting-up multiple hospitals; better than expected occupancy ratio and ARPOB growth in their key hospitals; and successful completion of the proposed merger with QCIL could lead to margin accretion and improvement in operational metrics.

Downside risks include lower footfalls in the new hospitals Kasaragod and Trivandrum and inefficient allocation of funds for expansion plans.

Published on May 22, 2025