The valuation of Aster DM Healthcare Ltd.'s plan to separate its India and Gulf businesses in a transaction worth $1 billion is in the expected range, according to analysts.
The valuation seems to be on the lower end, albeit within the expected range of 8–10 times, according to JM Financial Ltd. Analysts at Prabhudas Lilladher Pvt. also find valuations reasonable and in line with their estimates.
About The Deal
Aster DM announced on Tuesday that it would separate its India and the Gulf businesses in a transaction worth $1 billion.
Affinity Holdings Pvt., a subsidiary of the Moopen family-owned healthcare company, will transfer its shares in Aster DM Healthcare FZC—the Gulf unit—to promoter-owned Alpha GCC Holdings Ltd., according to an exchange filing. After the deal, Alpha GCC Holdings will be 35% owned by the Moopens and 65% by private Fajr Capital Advisors Ltd.
It was mainly to separate Aster's India and GCC businesses, which the company said would benefit from the strategic and financial flexibility to focus on growing market demand.
Deal Rationale
The India and GCC entities will be operated by separate dedicated management teams. It will also benefit from a dedicated investor base that will aid future growth in the Indian and GCC markets, respectively. Both hold significant growth potential, according to the company.
What Analysts Say
JM Financial sees this deal as positive, which will unlock value. However, it is uncertain on the quantum of dividend payout, promoter exit and capital allocation.
Timely closure of the GCC divestment and utilisation of proceeds will be a key monitorable in the near term. Proper capital allocation strategy will be the key to scale up India operations, according to Prabhudas Lilladher.
JM Financial
Maintains a 'buy' rating, with a target price of Rs 410.
Aster Labs, pharmacy and operation and management of hospitals have dragged India margin but are expected to turn around gradually.
It values GCC at Rs 165 per share based on Rs 82.2-billion cash consideration and the India business at 17 times December 2025 enterprise value/Ebitda.
Aster's margin profile can improve by 2 percentage points over the next two to three years. A few of the mature assets like Aster Medcity, Aster CMI and Aster Calicut already operate at over 30% margin, with scope to improve margin in other assets.
Prabhudas Lilladher
Maintains a 'buy' rating with a revised target price of Rs 430 from Rs 345.
Transaction in line with expectations.
Estimates a 23% compound annual growth rate for Ebitda from the India business over fiscal 2023–2026, aided by scale up in margin, healthy average revenue per operating bed, and bed additions.
Timely closure of GCC divestment and utilisation of proceeds will be key monitorable in the near term.
Shares of Aster DM closed 3.62% lower at Rs 381.80 apiece on the BSE as compared with a 0.13% advance in the benchmark Nifty 50.
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