Published on 14/02/2018 3:26:01 PM | Source: GEPLCapital Ltd

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Company Background

Aster DM Healthcare Ltd. (Aster) is incorporated in 1987 in Kochi, Kerala based healthcare service provider with operations in GCC states (United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain), India and the Philippines. Company’s Indian operations are headquartered in Kochi, Kerala. Aster DM Healthcare operates in multiple segments of the healthcare industry including hospitals, clinics and retail pharmacies. Company operates hospitals and clinics, pharmacies, diagnostic centers, educational institutions, and healthcare management and healthcare support systems. Company provides healthcare services to patients across economic segments under brand names including "Aster", "Medcare" and "Access". Aster's healthcare facilities consist of 9 hospitals, 90 clinics and 206 retail pharmacies in the GCC states, 10 multi-specialty hospitals and 7 clinics in India, and 1 clinic in the Philippines as of September 30, 2017. Aster's had 17,408 employees as of September 30, 2017, including 1,417 full time doctors, 5,797 nurses, 1,752 paramedics and 8,442 other employees (including pharmacists). Aster's hospitals in India are located in Kochi, Kolhapur, Kozhikode, Kottakkal, Bengaluru, Vijayawada, Guntur, Wayanad and Hyderabad and are generally operated under the Aster, MIMS, Ramesh and Prime brands.

Long standing presence across GCC states and India with strong brand equity

Aster DM is well placed to capitalise on the expected growth in healthcare sector in the GCC states due to their early mover advantage, strong brand presence using a targeted strategy of offering different brands to cater to diverse group of customers and existing track record. Their Aster”, “Medcare” and “Access” brands are widely recognised in the GCC states by both healthcare professionals and patients. The “Aster” and “Medcare” brands address the needs of the upper and middle income segments in the GCC states respectively, while their “Access” brand offers affordable healthcare services to blue collar expatriate workers and the lower income segment in the GCC states. Further, the presence of their pharmacies at multiple locations across various GCC states also enhances the visibility of their brands. Their long-standing presence in the GCC states has helped them gain an understanding of the respective markets and the regulatory environments and has contributed towards the success of the GCC operations. Aster DM operates in India under their “Aster”, “MIMS”, “Ramesh”, “Prime”, “Aster Aadhar” and “Aster CMI” brands. In fiscal 2015, they launched Aster Medcity in Kochi, Kerala, which is intended to be positioned as a destination for medical value travel from select markets including India and countries across the GCC states, the MENA region and South Asia.

Well diversified portfolio of service offerings to leverage multiple market opportunities

Aster DM has an established presence across multiple geographies, multiple healthcare delivery verticals and serve multiple economic segments. They provide healthcare services in all of the GCC states, in Jordan and in the Indian cities. Their clinic in Manila, Philippines commenced operations in August 2015. They operate in multiple formats providing a wide range of services through their diverse network of 9 hospitals, 90 clinics and 206 retail pharmacies in the GCC states, 10 multispecialty hospitals and 7 clinics in India, and 1 clinic in the Philippines as of September 30, 2017.

Valuation & Recommendation

Aster DM Healthcare Limited stands to gain from operating leverage. At a P/E of 45.2xs of FY17 EPS. We believe that Aster DM Healthcare Ltd. demands a discount to its domestic peers. We assign a Subscribe rating to the IPO.

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