BENGALURU (Reuters) – Aster DM Healthcare, a prominent Indian hospital chain operator, reported a significant rise in its first-quarter profit for the fiscal year, driven by higher occupancy rates during the flu season. The company’s quarterly consolidated profit from continuing operations surged by 81.3% to 810 million rupees ($9.7 million), compared to the same period last year. This figure excludes a substantial gain of 51.48 billion rupees from the sale of its Gulf business in the first quarter.
Aster DM Healthcare’s revenue from operations also saw a notable increase, climbing by 19% to 10.02 billion rupees. The company, which operates primarily in southern India, benefited from the acute flu season that coincides with the June quarter, bringing with it a higher incidence of diseases such as dengue and malaria. This seasonal trend significantly contributed to higher hospital occupancy rates, boosting the company’s revenue.
Analysts expect hospital chains in southern India, like Aster DM and its rival Apollo Hospitals, to continue benefiting from the flu season’s impact on healthcare demand. In contrast, other hospital chains with a significant presence in northern India, such as Fortis Healthcare and Max Healthcare, are anticipated to experience a subdued quarter. This is because the acute flu season in the northern region typically occurs later in the year, around September onwards.
The rise in the number of surgical cases during the quarter also contributed to Aster DM’s revenue growth. As more patients required surgical interventions, the company’s operations saw an uptick in activity, further enhancing its financial performance.
In comparison to its peers, Aster DM Healthcare’s financial metrics indicate a strong position. Analysts have given the company a “Buy” rating, reflecting positive sentiment towards its future performance. The company’s price-to-earnings (PE) ratio stands at 40.74, with an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio of 23.29. These figures suggest that Aster DM is valued reasonably in comparison to its earnings and overall enterprise value.
For context, Apollo Hospitals has a higher PE ratio of 58.21 and an EV/EBITDA ratio of 29.53, indicating a higher valuation relative to its earnings. However, Apollo is also rated as a “Buy” by analysts, with expectations of a 47.48% profit growth. Similarly, Max Healthcare and Fortis Healthcare have PE ratios of 55.38 and 43.71, respectively, with corresponding EV/EBITDA ratios of 37.35 and 23.44. Both companies also carry “Buy” ratings, though their expected profit growth is lower compared to Aster DM.
In summary, Aster DM Healthcare’s strong first-quarter performance, driven by seasonal factors and an increase in surgical cases, has positioned it well within the competitive landscape of Indian hospital chains. The company’s robust revenue growth and significant profit increase reflect its effective operational strategies and its ability to capitalize on regional healthcare demand trends.
SOURCE:
ECONOMIC TIMES
