Aster DM Healthcare reports strong growth, unveils merger to become top three player

Aster DM Healthcare reported a pivotal FY2025, marked by a landmark merger with Blackstone-backed Quality Care India Limited (QCIL), positioning the combined entity among India's top three healthcare players with 38 hospitals and 10,301 beds across 27 cities. This merger, recognized as one of India's largest M&A deals in healthcare, values Aster at 36.6x EV to EBITDA and QCIL at 25.2x EV to EBITDA, implying a 45% valuation premium for Aster. The transaction is cash neutral and is expected to be EPS accretive from the first full year of operations, with completion anticipated by Q4 FY2026. The combined entity plans to add over 3,800 beds, bringing total capacity to 14,200 beds over the coming years.

Financially, Aster DM Healthcare achieved robust performance in FY2025, with revenues growing 12% year-on-year to INR 4,138 Crores. Operating EBITDA increased by 30% to INR 806 Crores, leading to a margin improvement from 16.8% to 19.5%. Normalized PAT (post-NCI, excluding one-offs) saw a 49% increase, reaching INR 357 Crores, and ROCE rose by over 300 bps to 19.5%. The company declared an interim dividend of INR 4/- per equity share and recommended a final dividend of INR 1/- per equity share for FY2025, subject to shareholder approval. The company also announced plans to add 2,600 beds through a mix of greenfield and brownfield projects, primarily in Bangalore, Kerala, and Hyderabad.

Key operational improvements included material cost reduction from 25.3% in FY2022 to 20.9% in FY2025 and a turnaround in the lab business from a negative EBITDA of INR 9 Crores to a positive INR 10 Crores. The company's strategic priorities for FY2026 and beyond focus on accelerating growth, enhancing clinical differentiation, and advancing digital and commercial excellence, aiming for an EBITDA margin of 23% to 24% in the medium term.