Goal: ₹532
CMP: ₹414.65
Following Aster DM Healthcare merger with High quality Care India Ltd, the corporate will ascend to turn into one of many prime 3 hospital chains in India by way of mattress capability. Nonetheless, its inventory has skilled a decline of about 24 per cent YTD, amidst a broader market correction. Much like its friends, the corporate is anticipated to realize a sturdy income development pushed by double digit enhance in mattress capability and bettering ARPOBS.
Two-thirds of recent mattress additions are brownfield tasks, that are anticipated to spice up EBITDA margins for the mixed entity. Moreover, synergies from the merger are anticipated to contribute to a 2-3 per cent enchancment in operational effectivity.
Consequently, EBITDA per occupied mattress is forecasted to rise from ₹32 lakh in FY25 to ₹40 lakh by FY27. We consider that rising presence in metro cities, increasing EBITDA per occupied mattress and bettering RoIC will drive a better a number of for the corporate. This presents a compelling alternative for traders to amass the inventory at 16x EV/EBITDA (adjusted for each Minority curiosity and lease) for FY27. Total the merger will allow the corporate to increase its presence in new markets, profit for price synergies and speed up EBITDA development.
Consequently, we improve the inventory to Purchase from Maintain with a Mar’27 TP of ₹532 (34 per cent upside).
