Aster DM Healthcare: Buy Rating Maintained by Prabhudas Lilladher with Target Price of Rs 800

Aster DM Healthcare Sees Significant Growth in Q4 Consolidated EBITDA

Aster DM Healthcare (ASTERDM) has reported a substantial 26% year-over-year (YoY) growth in its Q4 consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) to Rs2.34 billion. This growth surpasses the research firm Prabhudas Lilladher's estimates by 12%. The improvement in EBITDA is attributed to strong performance across various clusters, with the Quality and Clinical Services (QCIL) segment experiencing a notable 23% YoY growth in EBITDA for Q4 and 24% YoY growth for the fiscal year 2026.

Mergers and Acquisitions

Aster DM Healthcare's board of directors has recently approved a merger with Quality Care (QCIL), positioning the company as the third-largest healthcare chain in India by revenue and bed capacity. This strategic move is expected to unlock significant synergies and drive growth for the combined entity. The merger is expected to enhance occupancy rates, expand margins, and add new bed capacity to the existing infrastructure.

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Outlook and Recommendations

Prabhudas Lilladher forecasts the combined entity to achieve an EBITDA growth rate of 22%+ compound annual growth rate (CAGR) over the fiscal years 2026-2028, reaching Rs29 billion. The research firm values the combined entity at 26x enterprise value (EV) to EBITDA on a fiscal year 2028 basis, adjusted for minority stakes and rental income. Based on this analysis, Prabhudas Lilladher maintains its 'BUY' rating for Aster DM Healthcare with a revised target price of Rs800 per share, valuing the combined entity at 30x EV to EBITDA on a fiscal year 2028 basis.

Note: The table above provides a comparison of Aster DM Healthcare's EBITDA growth rate and EV to EBITDA valuation for the fiscal years 2026, 2027, and 2028.

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