Aster DM Healthcare Limited is one of India’s largest and fastest-growing integrated healthcare service providers. Aster is listed on the Indian stock exchanges and is one of the largest privately held hospital chains in the country, with a prime focus on emerging cities, particularly in Southern and Central India. Aster DM Healthcare and Quality Care India Limited have recently signed a definitive agreement to merge, resulting in a merged listed entity that will be called Aster DM Quality Care Limited, thereby creating one of India’s top 3 hospital chains in terms of revenue and bed capacity.
This would result in significant strengths for the merged entity to offer scale, diversification, enhanced financial metrics, synergies, and increased growth potential with the backing of large private equity investors. Aster shareholders would hold 57.3%, and Quality Care shareholders would hold 42.7% in the new merged entity, jointly controlled by Aster promoters and Blackstone, holding 24.0% and 30.7% ownership, respectively. Quality Care India Limited is backed by major private equity investors, Blackstone and TPG. The merger is currently subject to regulatory, corporate, and shareholder approvals. The resulting new entity, Aster DM Quality Care Limited, will have a combined portfolio of four leading brands: Aster DM, CARE Hospitals, KIMSHEALTH, and Evercare, with a network of 38 hospitals and around 10,150 beds spread across 27 cities.
The merger is expected to be EPS accretive, throwing significant growth opportunities for both brownfield and greenfield expansion of 3,500 new beds expected over the next 2-3 years. The company recorded a 15% revenue growth, reaching Rs 3138 crores for the first nine months of FY25 on the back of a 12% year-on-year increase in average revenue per occupied bed and a 4% increase in average occupied beds. The companies operating EBITDA for 9MFY25 grew by 35%, reaching Rs 613 crores, and EBITDA margins expanded to 19%, up from 16.6% a year ago. On the other hand, net profit grew by 65%, reaching Rs 251 crores for 9MFY25, up from Rs 153 crores a year ago. The company has been quite successful and posting strong financial growth with a revenue CAGR of 23% and an operating EBITDA CAGR of 36% during the last five years. This has been achieved due to disciplined cost management, operational efficiency, and improved margins.
The hospital business continues to grow strongly due to a strategic focus on a well-diversified speciality mix, ensuring that no single speciality accounts for more than 15% of total revenue, thereby enhancing resilience and strengthening the long-term growth prospect in the healthcare sector. Aster DM Healthcare has been rapidly expanding over the past year by adding 100 beds at MIMS Kannur and another 100 beds at Aster Medcity, thus bringing the total capacity to 5128 beds as of 31 December 2024. The Aster DM Healthcare stock is quoting at Rs 418 on the bourses and is recommended by various fund managers and industry analysts for portfolio investment. Many brokers expect the Aster DM stock to appreciate significantly after the merger by Q3FY26 on the back of solid fundamentals. Investors are advised to do their own due diligence and ensure proper risk profile assessment and also check with their investment advisor before buying any stock.