Aster DM Healthcare Plans Major Expansion, Eyes New Markets in India

5 Feb 2024 , 03:24 PM

Aster DM Healthcare plans to add 1,500 beds to its multispecialty hospitals across India in the next 2 to 3 years as part of its expansion strategy.

The allocated capital for this expansion is approximately₹800-850 crore, according to Nitish Shetty, CEO of Aster DM Healthcare India. The expansion will increase the company’s bed count in India to over 6,000 beds, including upcoming facilities like Aster Capital in Thiruvananthapuram (350+ beds in the first phase by FY26) and Aster MIMS Kasargod (about 200+ beds).

Capacity will be added to existing hospitals in Medcity, MIMS Kannur (approximately 100 beds each), and Aster Whitefield (159 beds).

Aster is exploring growth opportunities in new markets like Maharashtra, Tamil Nadu, and Uttar Pradesh, aiming to secure a top-three position in those regions. The company sees potential in cities like Pune and Nagpur for expansion plans, focusing on areas with a population of 3 million or more.

Aster DM Healthcare, founded in 1987, operates in India and the Gulf region, with a current presence in Kerala, Karnataka, Maharashtra, AP, and Telangana. The company has 19 hospitals, 13 clinics, 226 pharmacies, and 251 patient experiences, with over 4,000 operational beds in India.

The India region business has a low debt-to-EBITDA ratio, allowing leverage for further expansion using internal cash accruals.

Aster approved the sale of its GCC business for $1.01 billion, with plans to distribute 70-80% of the upfront consideration as a dividend to shareholders.

In the labs and pharmacies business, the focus is on profitability rather than expansion, with expectations of breaking even by the final quarter for labs and next year-end for pharmacies.

International patients contribute around 5% of the group’s revenues, and the company has clauses to maintain the flow of international patients post-separation.

The promoter family holds a 41.88% stake in the Indian listed company and 35% in the GCC entity, with the stock receiving ‘buy’ calls from all seven analysts tracking the company.

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