Aster DM Healthcare GCC business stake sale unlocks value, say analysts; shares rally 11%

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Aster DM Healthcare share price jumped over 11% to hit a fresh 52-week high of ₹424.00 apiece on Friday. In the past one week, Aster DM Healthcare shares have risen 20%. The rally in Aster DM Healthcare shares comes on the back of the company’s move to sell its GCC (Gulf Cooperation Council) business for over $1 billion.

The hospital chain Aster DM Healthcare on Tuesday announced the long-awaited sale of its GCC business for an Enterprise Value (EV) of $1.3 billion, which was higher than analysts’ estimates. As per the transaction, a consortium led by United Arab Emirates (UAE) government-backed Fajr Capital will own 65% of the Gulf entity, while Aster’s promoter Azad Moopen will own 35% stake. Read here: Aster divests Gulf business for $1 bn Analysts believe the deal is positive for the company and unlocks value.

“While there had been concerns among investors on whether GCC would get a fair valuation, given this being a related party transaction, the GCC valuation comes as a positive surprise. In our view, the India business is now trading at ~18X FY2025E pre-Ind AS 116 EV/EBITDA and any rerating hereon will be contingent on further margin improvement coupled with disciplined expansion," Kotak Institutional Equities said. Factoring in steady progress in the existing hospitals along with the addition of new beds, the brokerage expects Aster DM to report healthy India sales/EBITDA CAGRs of 19% each over FY2023-26E.