th 07 February-2018

IPO PRODUCT NOTE

ASTER DM HEALTHCARE

About the company:

They are one of the largest private healthcare service providers which operate in multiple GCC states based on numbers of hospitals and clinics, according to the Frost & Sullivan Report, and an emerging healthcare player in . They currently operate in all of the GCC states, which comprise the , Oman, Saudi Arabia, Qatar, Kuwait and Bahrain, in Jordan (which they classify as a GCC state as part of our GCC operations), in India and the Philippines. Its GCC operations are headquartered in Dubai, United Arab Emirates and its Indian operations are headquartered in , .

They operate in multiple segments of the healthcare industry, including hospitals, clinics and retail pharmacies and provide healthcare services to patients across economic segments in several GCC states through its various brands “Aster”, “Medcare” and “Access”. They commenced operations in 1987 as a single doctor clinic in Dubai established by its founder, Dr. . company was incorporated in 2008 in a reorganization to facilitate the growth of our operations, subsequent to which operations in the GCC states and India were consolidated under company.

Positives of the company:

1. Operating leverage will kick in once he clients increase.

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

3. Ability to attract and retain high quality medical professionals.

4. Increase its presence by way of Greenfield expansions

Process

IPO opening date: 12-February-2018

IPO closure date: 15-February-2018

Face Value: Rs. 10 per share

Issue price band: Rs. 180 to Rs 190 per share.

Issue size: Approx Rs. 980 Crores on higher price band

IPO Lot size: 78 shares and 78 shares there-off

Minimum investment: Rs. 14,820

Company Financials (reinstated-consolidated)

The company generated revenue of Rs 3,899 Crores for the year ended Mar-15 and Rs 5,967.9 Crores for the year ended Mar-17.

The company posted a profit of Rs 272.1 Crores for the year ended Mar-15 and profit of Rs 266.7 Crores for the year ended Mar-17.

Its FY17 EPS is Rs 4.29 and 3 years average EPS is Rs 2.26.

Valuations

On the upper price band of Rs 190 and on consolidated restated FY17 EPS of Rs 4.29, P/E ratio works out to 44x. Even based on last 3 years restated consolidated EPS of Rs 2.26, P/E ratio works out to 84x. There are listed peers like Fortis Healthcare trading at P/E of 17x, Narayana Hrudalaya P/E of 72x, Apollo Hospitals 75x, Healthcare Global P/E of 103x. Hence Aster DM Healthcare IPO Price of Rs 190 is fully priced compared to its peers.

MH Take:

We don't think there is any rerating that would affect the company and hence Market~ Hub recommend to their valuable clients to avoid a long term investment as it seems costly. However, one can invest for IPO gains.

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