Upcoming IPO – Aster DM Hospital

IPO Size = Rs. 1900-2000

Launch date = Second half of 2016

View: Will be updated once the bid issue opens.

Aster DM Hospital (“Aster DM”) is one of the largest private healthcare service providers operating in multiple Gulf Cooperation Council (GCC) states with number of hospitals, clinics and retail pharmacies, and is an emerging player in India. It has operations in countries of Oman, Saudi Arabia, Qatar, Kuwait, Bahrain, Jordan and Philippines.

Dr. Azad Moopen, founder and promoter of Aster DM, commenced business with a single clinic in 1987 in Dubai. This small clinic was later incorporated as Aster DM Healthcare Ltd. in 2008. Aster DM is now aiming to raise capital through an Indian IPO, after having considered the options of listing on the London Stock Exchange (LSE) and in Dubai itself.  Aster DM has appointed investment bankers Kotak Mahindra and Bank of America Merill Lynch and Goldman Sachs (India) to carry out the IPO. Aster DM hopes to raise Rs. 1900-2000 Cr for purchase of medical equipment for up to Rs. 255 Cr, and for expansion and repayment of debt of Rs. 354 Cr.


  • Diversified Portfolio and Consistent Growth: The Company 280 operating facilities, including 13 hospitals with a total of 2537 beds as of March 31, 2016. It operates at retail level in GCC from where it generates over 90% revenue; and in India and Philippines.
  • Expansion in India: The company has acquired 29.97% stake in Dr. Ramesh Hospitals that owns 3 hospitals in Andhra Pradesh. Aster DM also has an agreement to opt to buy majority stake in Dr. Ramesh Hospitals.
  • Strong Financials: Net Revenue and Profit has for Aster DM has surged from Rs. 1181.42 Cr and 52.3 Cr in FY12 to Rs. 3875.80 Cr and Rs. 168 Cr in FY15 respectively. Net Profit for 9 month period ended December 2015 stood at Rs. 71.32 Cr.
  • High Quality Medical Professionals: Aster DM employs 1,003 full time doctors, 4,406 nurses, 1,063 pharmacists, 1,285 paramedics and 5,017 other employees. Its staff boasts of some of most elite specialist, physicians, and surgeons trained from some of the best medical schools of the world.
  • Market Strategy: Indian Medical Tourism sector is estimated at US$ 3 billion and is expected to grow US$ 8 billion by 2020. Aster DM has large potential to capitalize the market. In past, the company successfully expanded its business and benefitted greatly by introduction of mandatory health insurance by some of the GCC countries.


  • Ownership structure is subject to risks associated with foreign ownership restrictions in most GCC states. Like UAE, from where majority of revenue is generated, restricts any foreign national to hold more than 49% of the company.
  • The larger sum of revenues from GCC states comes from small number of insurance companies. Any change in these companies policy could have adverse effects on business.
  • Purchase of specialized medical equipment from foreign manufacturers including Surgitronic and Alliance Biomedical Private Limited in foreign currency. The havoc caused by the fluctuation in INR against foreign currencies like could increase these expenditures significantly.
  • Market cap at Rs. 1600 Cr equals to 160 times of net profit (FY16). In contrast, the market cap of Apollo is at 55 times of net profit, which is more fair-minded to the investors.

Aster DM Hospital Financials for last 5 Fiscal years (*in Rs Cr)

*(Rs. Cr)
Particulars FY 2012 FY 2013 FY 2014 FY 2015 9 months ended on Dec 31, 2015
Revenue 1,189.18 1,938.76 2,889.56 3,898.62 3,743.66
Expenses 1,024.71 1,666.53 2,420.31 3,305.35 3,282.51
Operating Profit 164.47 272.23 469.25 593.27 461.15
Net Profit 52.03 91.78 177.78 167.96 71.32
Finance Costs 15.37 44.90 47.84 65.19 59.36
Shareholders’ Fund 670.41 779.33 910.54 1,352.38 3,289.74
Long Term Borrowings 198.70 240.78 526.31 505.14 800.74
Debt to Equity Ratio 0.30 0.31 0.58 0.37 0.24
Interest Coverage Ratio 10.70 6.06 9.80 9.10 7.76

Average Debt-to-Equity Ratio (FY 2012-FY 2015) = 0.39

Average Interest Coverage Ratio (FY 2012-FY 2015) = 8.91


Authored by Abhimanyu Hans